Question

Sheffield Company purchases equipment on January 1, Year 1, at a cost of $570,000. The asset is expected to have a service life of 12 years and a salvage value of $51.300. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to decimal places, eg. 5,125.) Depreciation for Year 1 $ Depreciation for Year 2 $ $ Depreciation for Year 3 e Textbook and Media Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years-digits method. Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $ e Textbook and Media Compute the amount of depreciation for each of Years 1 through 3 using the double-declining balance method. (Round depreciation rate to 2 decimal places, e.g. 15.84%. Round answers to decimal places, e.g. 45,892.) Depreciation for Year 1 $ Depreciation for Year 2 5 10:34 PM -

Answer 1

Answer 1 Straight line Method
Depreciation for year 1	$        43,225
Depreciation for year 2	$        43,225
Depreciation for year 3	$        43,225
Answer 2 Sum of digits method
Depreciation for year 1	$        79,800
Depreciation for year 2	$        73,150
Depreciation for year 3	$        66,500
Answer 3 Double declining Method
Depreciation for year 1	$        95,000
Depreciation for year 2	$ 79,167
Depreciation for year 3	$        65,972

Detailed workings

Straight line method
Capitalized Cost	$           570,000
Life of Assets	12	years
Residual value	$              51,300
Depreciable value = Cost - Salvage value	$           518,700
Depreciation per year = Depreciable value/Life	$              43,225	Per year
Depreciation every year	$              43,225
Double Declining Balance Method
Capitalized Cost	$           570,000
Life of Machine	12	years
Residual value	$              51,300
Rate of Depreciation under DDB = (2*100/12)%	16.67%
First yea Depreciation = $570000*16.67%	$              95,000
Book value at the start of 2nd year	$           475,000
Depreciation for 2nd year = 475000*16.67%	$        79,167.00
Book value at the start of 3rd year	$           395,833
Depreciation for 3rd year = 395833*16.67%	$              65,972
Sum of Year Digit Method
Capitalized Cost	$           570,000
Life of Assets	12	years
Residual value	$              51,300
Depreciable value = Cost - Salvage value	$           518,700
sum of Digit for 12 years 1 to 12	78
Depreciation for first year = $518700*12/78	$              79,800
Depreciation for second year = $518700*11/78	$              73,150
Depreciation for Third year = $518700*10/78	$              66,500