Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $54,000. The equipment has an estimated residual value of $2,700. The equipment is expected to process 271,000 payments over its three-useful Life. Per yea expected payment transactions are 65,040, year 1, 149,050, year 2,56,910, year 3.Required:Complete a depreciation schedule for each of the alternative methods.1. Straight line2. Units-of-production3. Double declining balance

The Completion of a Depreciation Schedule in the books of Sushi Corp. for the three Depreciation Methods are as follows:

Straight-line Method:

Year              Cost        Depreciation       Accumulated    Net Book

                                         Expense          Depreciation      Balance

Year 1        $54,000         $17,100                 $17,100         $36,900

Year 2         54,000           17,100                  34,200            19,800

Year 3         54,000           17,100                  51,300              2,700

Units-of-production method:

Year              Cost        Depreciation       Accumulated    Net Book

                                         Expense          Depreciation      Balance

Year 1        $54,000         $12,312                 $12,312          $41,688

Year 2         54,000          28,215                 40,527             13,473

Year 3         54,000          10,773                  51,300              2,700

Double-declining-balance Method:

Year              Cost        Depreciation       Accumulated    Net Book

                                         Expense          Depreciation      Balance

Year 1        $54,000       $36,000               $36,000          $18,000

Year 2         54,000          12,000                 48,000              6,000

Year 3         54,000           3,300                  51,300               2,700

Data and Calculations:

Cost of equipment = $54,000

Estimated residual value = $2,700

Estimated useful life = 3 years

Depreciable amount = $51,300 ($54,000 - $2,700)

Units-of-production method:

Depreciation rate per transaction = $0.1893 ($51,300/271,000)

Number of payments = 271,000    Depreciation Expense

Year 1 transactions = 65,040      = $12,312 ($0.1893 x 65,040)

Year 2 transactions = 149,050   = $28,215 ($0.1893 x 149,050)

Year 3 transactions = 56,910     = $10,773 ($0.1893 x 56,910)

Straight-line Method:

Annual depreciation expense = $17,100 ($51,300/3)

Double-declining-balance Method:

Depreciation rate = 66.67% (100/3 x 2)

First year depreciation expense = $36,000 ($54,000 x 66.67%)

Second year depreciation expense = $12,000 ($18,000 x 66.67%)

Third year depreciation expense = $3,300 ($6,000 - $2,700)

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Answer and Explanation:

The preparation of Straight line method , Units of production method and Double declining method is shown below:-

1. Straight line method

     Income statement                       Balance Sheet

Year           Depreciation     Cost    Accumulated  Book value

                       expense                     depreciation

At acquisition                                                                 $54,000

1                 $17,100    $54,000       $17,100             $36,900

2                 $17,100    $54,000       $34,200           $19,800

3                 $17,100    $54,000       $51,300            $2,700

Working Note

Depreciation expenses

For 1 Year ($54,000 - $2,700) ÷ 3

= $17,100

For 2 year ($54,000 - $2,700) ÷ 3

= $17,100

For 3 year ($54,000 - $2,700) ÷ 3

= $17,100

2. Units of production method

     Income statement                       Balance Sheet

Year           Depreciation     Cost    Accumulated  Book value

                       expense                     depreciation

At acquisition                                                                 $54,000

1                       $12,312    $54,000     $12,312                $41,688

2                      $28,215   $54,000     $40,527               $13,473

3                      $10,773   $54,000      $51,300               $2,700

Working Note

For 1 year ($54,000 - $2,700) ÷ 271,000 × $65,040 = $12,312

For 2 year ($54,000 - $2,700) ÷ 271,000 × $149,050 = $28,215

For 3 year ($54,000 - $2,700) ÷ 271,000 × $56,910 = $10,773

3. Double declining method

     Income statement                       Balance Sheet

Year           Depreciation     Cost    Accumulated  Book value

                       expense                     depreciation

At acquisition                                                                 $54,000

1                     $36,000     $54,000   $36,000              $18,000

2                    $12,000     $54,000    $48,000              $6,000

3                    $3,300     $54,000     $51,300                $2,700

Working Note

For 1 year = $54,000 ÷ 3 × 2 = $36,000

For 2 year = $18,000 ÷ 3 × 2 = $12,000

For 3 year = 6,000 - 2,700 = $3,300

Therefore the preparation of depreciation schedule for each of the alternative methods is prepared above.

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