Homework Answers
Information Given -
Assets purchase price = $55000.
Expected Life = 6 years.
Salvage value = $18000.
.
(c) -- Compute Sum of Years' Digits Depreciation, Accumulated Depreciation, and Remaining Book Value for each year.
Answer -
| Year | Depreciation Base ($) | Remaining Life of Asset |
Depreciation Fraction [Remaining Life / sum of years’ digits] |
Depreciation expense ($) | Accumulated Depreciation ($) | Book Value ($) |
| (A) | (B) | (C) | (D) | (E) = (B*D) | (F) | (G) |
| 1 |
37000 [Refer working Note - (1)] |
6 |
6 / 21 [Refer working Note - (2)] |
10571.43 [$37000 * 6/21] |
10571.43 |
44428.57 [55000-10571.43] |
| 2 | 37000 | 5 | 5 / 21 |
8809.52 [$37000 * 5/21] |
19380.95 [10571.43+8809.52] |
35619.05 [44428.57-8809.52] |
| 3 | 37000 | 4 | 4 / 21 |
7047.62 [$37000 * 4/21] |
26428.57 [19380.95+7047.62] |
28571.43 [35619.05-7047.62] |
| 4 | 37000 | 3 | 3 / 21 |
5285.71 [$37000 * 3/21] |
31714.28 [26428.57+5285.71] |
23285.72 [28571.43-5285.71] |
| 5 | 37000 | 2 | 2 / 21 |
3523.81 [$37000 * 2/21] |
35238.09 [31714.28+3523.81] |
19761.91 [23285.72-3523.81] |
| 6 | 37000 | 1 | 1 / 21 |
1761.90 [$37000 * 1/21] |
37000 [35238.09+1761.90] |
18000 [19761.91-1761.90] |
# Working Notes -
| Working Note No. | Particulars | Calculation | |
| 1. | Depreciation Base |
Assets purchase price - Salvage value = $55000 - $18000 |
$37000 |
| 2. | Sum of Years’ Digits | = 1 + 2 + 3 + 4 + 5 + 6 | 21 |
Add Answer to:
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accumulated depreciation for the first three years of the asset’s
life under the straight-line method, the sum-of-the-years’-digits
method, and the double-declining-balance method.
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On July 1, 2020, Novak Company purchased for $5,040,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $210,000. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
2020
2021
Sum-of-the-Years'-Digits Method
Equipment
$5,040,000
$5,040,000
Less: Accumulated Depreciation
$
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Testbank Problem 134
On July 1, 2020, Blue Spruce Company purchased for $6,660,000
snow-making equipment having an estimated useful life of 5 years
with an estimated salvage value of $277,500. Depreciation is taken
for the portion of the year the asset is used.
Complete the form below by determining the depreciation expense
and year-end book values for 2020 and 2021 using the
1.
sum-of-the-years'-digits method.
2.
double-declining balance method.
2020
2021
Sum-of-the-Years'-Digits Method
Equipment
$6,660,000
$6,660,000
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