Question

Ejercicio de Aplicación: Tema: Propiedad, planta y equipo, recursos naturales e intangibles The straight-line depreciation method 1. On January 1, 20X3, Perkins Printing Corporation purchased a digital press for $1.450,000. It cost an additional $50,000 to deliver, install, and calibrate the press. This machine has a service life of 5 years, at which time it is expected that the device will be disposed of for a $100,000 salvage value. Perkins uses the straight-line depreciation method. (a) Prepare a schedule showing annual depreciation expense, accumulated depreciation, and related calculations for each year. Year Depreciation Expenses Accumulated Depreciation at end of the year T Annual Expenses calculation ! 20X3 20X4 20X5 20X6 20X7

Answer 1

Year	Depreciation Expenses	Accumulated Depreciation at end of the year	Annual Expenses calculation
20X3	$280,000	$280,000	( $1,400,000 / 5 )
20X4	$280,000	$560,000	( $1,400,000 / 5 )
20X5	$280,000	$840,000	( $1,400,000 / 5 )
20X6	$280,000	$1,120,000	( $1,400,000 / 5 )
20X7	$280,000	$1,400,000	( $1,400,000 / 5 )

Straight-line depreciation = Depreciable amount / Useful life of the asset

Capitalised amount of the press = Purchase price + Cost of installation, delivery and calibrating = $1,450,000 + 50,000 = $1,500,000

Depreciable amount = Capitalised amount of the press - Salvage value = $1,500,000 - $100,000 = $1,400,000.

Depreciation under straight line basis remains the same every year,

Depreciation per year = Depreciable amount / Useful life of the asset = $1,400,000 / 5 years = $280,000 per year.