Please full calculation and explanation.
Homework Answers
Solution 1:
Cost of Equipment = $375,000
Residual value = $62,500
Useful life = 8 years
Depreciation rate - SLM = 1/8 = 12.50%
Depreciable cost = Cost - Residual value = $375,000 - $62,500 = $312,500
Annual depreciation - SLM = $312,500 / 8 = $39,063
Depreciation rate - DDB = 12.50%*2 = 25%
Annual depreciation using DDB:
2017 = $375,000*25% = $93,750
2018 = ($375,000 - $93,750) * 25% = $70,313
2019 = ($375,000 - $93,750 - $70,313) * 25% = $52,734
| Depreciation Schedule | |||
| Particulars | 2017 | 2018 | 2019 |
| A. Double - Declining balance method: | |||
| Equipment | $375,000.00 | $375,000.00 | $375,000.00 |
| Less: Accumulated Depreciation | $93,750.00 | $164,063.00 | $216,797.00 |
| Year End book value | $281,250.00 | $210,937.00 | $158,203.00 |
| Depreciation expense for the year | $93,750.00 | $70,313.00 | $52,734.00 |
| B. Straight line method | |||
| Equipment | $375,000.00 | $375,000.00 | $375,000.00 |
| Less: Accumulated Depreciation | $39,063.00 | $78,126.00 | $117,189.00 |
| Year End book value | $335,937.00 | $296,874.00 | $257,811.00 |
| Depreciation expense for the year | $39,063.00 | $39,063.00 | $39,063.00 |
Solution 2:
Cost of Equipment = $375,000
Residual value = $62,500
Useful life = 8 years
Depreciation rate - SLM = 1/8 = 12.50%
Depreciable cost = Cost - Residual value = $375,000 - $62,500 = $312,500
Annual depreciation - SLM:
2017 = $312,500 / 8 * 6/12 = $19,531
2018 = $312,500/8 = $39,063
2019 = $312,500/8 = $39,063
Depreciation rate - DDB = 12.50%*2 = 25%
Annual depreciation using DDB:
2017 = $375,000*25%*6/12 = $46,875
2018 = ($375,000 - $46,875) * 25% = $82,031
2019 = ($375,000 - $46,875 - $82,031) * 25% = $61,524
| Depreciation Schedule | |||
| Particulars | 2017 | 2018 | 2019 |
| A. Double - Declining balance method: | |||
| Equipment | $375,000.00 | $375,000.00 | $375,000.00 |
| Less: Accumulated Depreciation | $46,875.00 | $128,906.00 | $190,430.00 |
| Year End book value | $328,125.00 | $246,094.00 | $184,570.00 |
| Depreciation expense for the year | $46,875.00 | $82,031.00 | $61,524.00 |
| B. Straight line method | |||
| Equipment | $375,000.00 | $375,000.00 | $375,000.00 |
| Less: Accumulated Depreciation | $19,531.00 | $58,594.00 | $97,657.00 |
| Year End book value | $355,469.00 | $316,406.00 | $277,343.00 |
| Depreciation expense for the year | $19,531.00 | $39,063.00 | $39,063.00 |
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Please full calculation and explanation.
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