Question

Preparing Depreciation Schedules Using Various Depreciation Methods Frito Inc. acquired equipment on January 1, 2020, at a cost of $12,000 that is estimated to have a useful life of five years and a residual value of $3,000. Required Prepare a depreciation schedule showing annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset using the following methods. a. Straight-line method. b. Sum-of-the-years'-digits method. C. Double-declining-balance method. Straight-line Sum-of-the-years'-digits Double-declining balance c. Double-Declining-Balance Depreciation Method For the Period End of Period Reporting Depreciation Accumulated Book Period Expense Depreciation Value Jan. 1, 2020 Dec. 31, 2020 $ Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2024

Answer 1

Cost 12000 Life 5 years Residual Value 3000 In Double declining balance method assets is depreciated at twice the rate it is done in straight line method Depreciation rate for double declining balance method 2 Depreciation Rate as per SLM Therefore, Depreciation Rate as per SLM 1/Useful life - 1/5 20 % Depreciation rate for double declining balance method 2*20 % 40 % Depreciation Expense ( Book Value 40%) Accumulated Depreciation Book value Reporting Period Calculations 1-Jan-20 12000 31-Dec-20 12000* 40% 4800 4800 7200 31-Dec-21 7200*40% 2880 7680 4320 31-Dec-22 Book value Residual value Further 1320 9000 3000 depreciation is not charged to keep