Question

Crane Company purchases equipment on January 1, Year 1, at a cost of $474,000. The asset is expected to have a service life of 12 years and a salvage value of $42,660. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to 0 decimal places, e.g. 5,125.) Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $ 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 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 0 decimal places, e.g. 45,892.) Depreciation for Year 1 Depreciation for Year 2 Depreciation for Year 3

Answer 1

Straight line method = (474,000-42,660)/12 = 35945

Depreciation for year 1	35945
Depreciation for year 2	35945
Depreciation for year 3	35945

SYD = 12*(12+1)/2 = 78

Depreciation for year 1 (12/78)*(474,000-42,660)	66360
Depreciation for year 2 (11/78)*(474,000-42,660)	60830
Depreciation for year 3 (10/78)*(474,000-42,660)	55300

Double declining rate = 200/Useful life = 200/12 = 16.67%

Depreciation for year 1 (474,000*16.67%)	79015
Depreciation for year 2 (474,000-79015)*16.67%	65,843
Depreciation for year 3	54867