Question

Chapter 4 Case Problem 1: 

KELLY'S BOUTIQUE 

Kelly's Boutique owned the following fixed assets as of December 31, 2018: 

Answer 1

1	Depreciation summary as per Stright-line method (SL )
	Asset#	101	102	103	Total ($)
	Date acquired	1/1/2015	1/1/2017	1/1/2017
	Cost ( $ )	625,000	95,000	84,000
	Less: Salvage value ($ )	(25,000)	(4,000)	(5,000)
	Depreciable value ($ )	600,000	91,000	79,000
	Estimated useful life ( Years )	25	4	5
	Annual depreciatio - SL ($)	24,000	22,750	15,800
	Depreciation -2015	24,000	-	-	24,000
	Depreciation -2016	24,000	-	-	24,000
	Depreciation -2017	24,000	22,750	15,800	62,550
2	Depreciation summary as per Double declaining-balance method (DDB)
	Depreciation under double declaining-balance method = 2 x SL depreciation rate x Beginning book value of asset.
	Asset#	101	102	103	Total ($)
	SL depreciation rate (% )	4%	25%	20%
	Beginning book value of asset for the year 2015	625,000	0	0
	Depreciation (DDB )- 2015	50,000	0	0	50,000
	Beginning book value of asset for the year 2016	575,000	0	0
	Depreciation (DDB )- 2016	46,000	0	0	46,000
	Beginning book value of asset for the year 2017	529,000	95,000	84,000
	Depreciation (DDB )- 2017	42,320	47,500	33,600	123,420
3	Depreciation summary as per Sum of years of digit method (SYD)
	Depreciation under some of years digit method = (Remaining useful life /Sum of the year's digit) x Depreciable value
	Asset#	101	102	103	Total ($)
	Depreciable value ($ )	600,000	91,000	79,000
	Estimated useful life ( Years )	25	4	5
	Sum of years of digit	325	10	15
	Depreciation (SYD )- 2015	46,153.85	-	-	46,153.85
	Depreciation (SYD)- 2016	44,307.69	-	-	44,307.69
	Depreciation (SYD)- 2017	42,461.54	36,400.00	26,333.33	105,194.87