Sonic Corporation purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $51,300. The equipment has an estimated residual value of $3,300. The equipment is expected to process 267,000 payments over its three-year useful life. Per year, expected payment transactions are 64,080, year 1; 146,850, year 2; and 56,070, year 3.




Required:


Complete a depreciation schedule for each of the alternative methods:


Units-of-production.


Double-declining-balance.

Based on the information, the Depreciation expense is $2,687.77

Total cost of equipment: $51,300

Residual value: $3,300

Expected units of production: 267,000 payments

Depreciation expense per unit = (Total cost - Residual value) / Expected units of production

Depreciation expense per unit = ($51,300 - $3,300) / 267,000

Depreciation expense per unit = $48,000 / 267,000

Depreciation expense per unit = $0.18 per payment

Now, let's calculate the depreciation schedule using the units-of-production method:

Year 1:

Expected payments: 64,080

Depreciation expense: $0.18 per payment * 64,080 payments = $11,534.40

Year 2:

Expected payments: 146,850

Depreciation expense: $0.18 per payment * 146,850 payments = $26,433.00

Year 3:

Expected payments: 56,070

Depreciation expense: $0.18 per payment * 56,070 payments = $10,092.60

Next, let's calculate the depreciation using the double-declining-balance method. This method assumes that the asset depreciates at a faster rate in the early years of its useful life and slows down over time.

Step 1: Calculate the straight-line depreciation rate.

Straight-line depreciation rate = 100% / Useful life in years

Straight-line depreciation rate = 100% / 3 years = 33.33%

Step 2: Calculate the double-declining-balance rate.

Double-declining-balance rate = Straight-line depreciation rate * 2

Double-declining-balance rate = 33.33% * 2 = 66.67%

Now, let's calculate the depreciation schedule using the double-declining-balance method:

Year 1:

Depreciation expense = Book value at the beginning of the year * Double-declining-balance rate

Book value at the beginning of the year = Total cost of equipment

Depreciation expense = $51,300 * 66.67% = $34,205.61

Year 2:

Depreciation expense = Book value at the beginning of the year * Double-declining-balance rate

Book value at the beginning of the year = Total cost of equipment - Depreciation expense from the previous year

Depreciation expense = ($51,300 - $34,205.61) * 66.67% = $10,014.64

Year 3:

Depreciation expense = Book value at the beginning of the year * Double-declining-balance rate

Book value at the beginning of the year = Total cost of equipment - Depreciation expense from the previous year

Depreciation expense = ($51,300 - $34,205.61 - $10,014.64) * 66.67%

= $2,687.77

Learn more about depreciation on

https://brainly.com/question/1203926

#SPJ1

What are three significant methods for maximizing human potential for disruptive innovation?

How do I tell if these are valid estimates? Under cluster sampling

8. Which of the following is the correct image for the reflection?
a.
C.
b.
d.
e.

In times of profound change, such as the ongoing effects of the COVID-19 pandemic, how can we balance the analytical, problem-solving approach with a deeper, interconnected understanding of the world?