Homework Answers
Sum of the years' digit method
| 2021 | 2022 | |
| Equipment | 6,120,000 | 6,120,000 |
| Less: Accumulated depreciation | 1,955,000 | 3,519,000 |
| Year end book value | 4,165,000 | 2,907,000 |
| Depreciation expense for the year | 1,955,000 | 1,564,000 |
Equipment cost = 6,120,000
Salvage value= 255,000
Useful life 5 years
Depreciation amount= acquisition cost - salvage value
= 6,120,000-255,000= 5,865,000
Sum of useful life =5+4+3+2+1=15
Year 1 depreciation= 5,865,000×5÷15 = 1,955,000
Year 2 depreciation= 5,865,000×4÷15= 1,564,000.
Double decling balance method
| 2021 | 2022 | |
| Equipment | 6,120,000 | 6,120,000 |
| Less: Accumulated depreciation | 2,448,000 | 3,916,800 |
| Year end book value | 3,672,000 | 2,203,200 |
| Depreciation expense for the year | 2,448,000 | 1,468,800 |
Double decling balance formula= 2×cost of the asset×depreciation rate
Depreciation rate =(1÷5)×100= 20%
=2×20%=40%
Year 2020 depreciation= 6,120,000×40%= 2,448,000.
Year 2021 depreciation= 3,672,000×40%= 1,468,800.
Straight line method
Depreciation expense for 2022 = 1,717,000
Cost of the equipment= 6,120,000
Depreciation for 2020 = 1,173,000
Depreciation for 2021 = 1,173,000
Cost of the asset after 2 years = 6,120,000-2,346,000= 3,774,000
In the year 2022 the asset will be useful for one more year only and salvage value is 340,000
Depreciation for 2022= 3,774,000-340,000= 3,434,000÷2 = 1,173,000
Depreciation base for 2020 is 3,434,000 ( 3,774,000-340,000)
____×____
All the best
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On July 1, 2020, Novak Company purchased for $5,040,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $210,000. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
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2021
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On July 1, 2020, Blue Spruce Company purchased for $6,660,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $277,500. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
2020
2021
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Testbank Problem 134
On July 1, 2020, Novak Company purchased for $5,040,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $210,000. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
2020
2021
Sum-of-the-Years'-Digits Method
Equipment
$5,040,000
$5,040,000
Less: Accumulated Depreciation
$
$...
Testbank Problem 134
On July 1, 2020, Blue Spruce Company purchased for $6,660,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $277,500. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
2020
2021
Sum-of-the-Years'-Digits Method
Equipment
$6,660,000
$6,660,000
Less: Accumulated Depreciation
$...
On July 1, 2020, Yorkton Company purchased for $640,000 equipment having an estimated useful life of eight years with an estimated residual value of $30,000. Depreciation is calculated to the nearest month. The company has a December 31 year-end. Required: Complete the following schedules: (Amount to be deducted should be indicated by a minus sign.) 2020 2021 2022 1. Double-declining-balance method: Equipment Less: Accumulated depreciation Year-end book value Depreciation expense for the year 2. Straight-line method: Equipment Less: Accumulated depreciation...
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On January 4, 2019, Columbus Company purchased new equipment for
$693,000 that had a useful life of four years and a salvage value
of $53,000.
Required:
Prepare a schedule showing the annual depreciation and end-of-year
accumulated depreciation for the first three years of the asset’s
life under the straight-line method, the sum-of-the-years’-digits
method, and the double-declining-balance method.
Analyze:
If the double-declining balance method is used to compute
depreciation, what would be the book value of the asset at the end...
Sunland Company purchased equipment for $222,000 on October 1, 2020. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $13,200. Estimated production is 36,000 units and estimated working hours are 20,000. During 2020, Sunland uses the equipment for 550 hours and the equipment produces 1,000 units. Compute depreciation expense under each of the following methods. Sunland is on a calendar-year basis ending December 31. (Round rate per hour and rate...
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