# Straight-Line Depreciation

 ACT300 Principles of Accoutning I Module 6: Critical Thinking Template Option 1 (Depreciation Template) Straight-Line Depreciation Input amounts Record journal entry for depreciation expense for the third year: Cost \$0 Salvage value 0 Debit Credit Depreciable cost \$0 Dec. 31 Depreciation Expense Useful life 0 years Accumulated Depreciation – Equipment Useful life in units of production 0 To record annual depreciation Record journal entry for asset disposal in the fourth year: Straight line method Formula Cost – Salvage Value * * Depreciable cost = Cost – Salvage Value Debit Credit Useful life in years Dec. 31 Cash Accumulated Depreciation = 0 Loss on disposal Equipment To record disposal of equipment Annual depreciation expense= 0 Also, compute the straight line depreciation rate. The formula is 100% divided by the useful life in years Compute the straight line depreciation rate below: 0% 0 Straight line depreciation rate ERROR:#DIV/0! Depreciation for the Period End of Period Annual period Depreciable Cost Depreciation rate Depreciation Expense Accumulated Depreciation Book Value * Year 1 Year 2 Year 3 Year 4 Year 5 ** * Cost of machine ** Salvage value is not depreciated

## Units-of-Production

 ACT300 Principles of Accoutning I Module 6: Critical Thinking Template Option 1 (Depreciation Template) Units of Production Depreciation Input amounts Cost \$0 Salvage value 0 Record journal entry for depreciation expense for the third year: Depreciable cost \$0 Useful life 0 years Useful life in units of production = 0 Debit Credit Dec. 31 Depreciation Expense Accumulated Depreciation – Equipment Units of Production To record annual depreciation Step 1: Depreciation per unit Cost – Salvage Value * * Depreciable cost = Cost – Salvage Value Record journal entry for asset disposal in the fourth year: Useful life in units of production Debit Credit Dec. 31 Cash Accumulated Depreciation Loss on disposal Depreciation per unit = \$ – 0 Equipment To record disposal of equipment Step 2: Depreciation expense Depreciation per unit x Units of production* = 0.00 x 0 Depreciation expense = \$ – 0 Depreciation for the Period End of Period Annual period Number of Units Depreciation per unit Depreciation Expense Accumulated Depreciation Book Value \$0 * Year 3 * Cost of item ** Salvage value is not depreciated

## Double-Declining Balance

 ACT300 Principles of Accoutning I Module 6: Critical Thinking Template Option 1 (Depreciation Template) Double Declining Balance Depreciation Input amounts Cost \$0 Salvage value 0 Record journal entry for depreciation expense for the third year: Depreciable cost \$0 Useful life 0 years Useful life in miles 0 Debit Credit Dec. 31 Depreciation Expense Accumulated Depreciation – Equipment Units of Production To record annual depreciation Step 1: Straight Line Rate = 100% * Depreciable cost = Cost – Salvage Value Useful life in years Straight line depreciation rate = Step 2: Double-declining-balance rate 2 x Straight-line rate = 2 x 0% Double-declining-balance rate 0% Step 3: Depreciation expense Double-Declining- balance rate x Beginning-period book value = 0% x \$0 Depreciation expense \$0 Depreciation for the Period End of Period Annual period Beginning of Period Book Value Depreciation Rate Depreciation Expense Accumulated Depreciation Book Value \$0 * Year 1 Year 2 Year 3 Year 4 Year 5 * Cost of equipment