Homework Answers
c. Sum of years digit depreciation = Purchase value of Asset - Salvage value / no. of years and same depreciation is applied each year
Here it is , $55000-$18000 /6 =6167 and it will be deducted from Purchase value each year to derive current asset value
Accumulated Depreciation : 6167*6 =37000
Remaining Book value : After 1st year- 48833(55000-6167) , After 2nd year:42166(48833-6167) , After 3rd year: 36499(42166-6167) , After 4th year:30332( 36499-6167), After 5th year:24165 (30332-6167) , After 6th year:18000(24165-6165*)
*Two rupees difference is due to rounding off
b.125% Declining balance depreciation
Yearly Depreciation Rate = 125%/No. of years
=125%/6 =20.83%
Now , This depreciation rate will be applied each year
Period Depeciaion Book value
1 ( 55000-18000) *20.83% =7707 55000-7707= 47293
2 (37000-7707) *20.83% =6102 47293-6102=41191
3 (29293-6102)*20.83%=4831 41191-4831=36360
4 (23191-4831)*20.83%=3824 36360-3824 =32536
5 14536*20.83%=3028 32536-3028=29508
6 11508*20.83%=2397 29508-2397=27111
a. Straight line depreciation
Depreciation rate= 1/No. of years
=1/6 =16.67%
Depreciable cost =55000-18000=37000
Depreciation = 37000*16.67% =6168 anuual depreciation
Accumualated Depreciation = 6168*6 =37008*
*Eight rupees difference is due to rounding off
Remaining Book value : After 1st year- 48833(55000-6167) , After 2nd year:42166(48833-6167) , After 3rd year: 36499(42166-6167) , After 4th year:30332( 36499-6167), After 5th year:24165 (30332-6167) , After 6th year:18000(24165-6165**)
*Two rupees difference is due to rounding off
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b. Compute 125% Declining Balance Depreciation, Accumulated Depreciation, and Remaining Book Value for each year (36...
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On January 4, 2019, Columbus Company purchased new equipment for $693,000 that had a useful life...
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...
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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...
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