Homework Answers
Solution
| Depreciation Expense for | Net Book value at the end of year | |||
| Method of Depreciation | Year 1 | Year 2 | Year 1 | Year 2 |
| Straight-line | $ 22,500.00 | $ 22,500.00 | $ 73,500.00 | $ 51,000.00 |
| Units-of-production | $ 32,250.00 | $ 33,750.00 | $ 63,750.00 | $ 30,000.00 |
| Double-declining-balance | $ 48,000.00 | $ 24,000.00 | $ 48,000.00 | $ 24,000.00 |
Working
| Straight line Method | ||
| A | Cost | $ 96,000 |
| B | Residual Value | $ 6,000 |
| C=A - B | Depreciable base | $ 90,000 |
| D | Life [in years left ] | 4 |
| E=C/D | Annual SLM depreciation | $ 22,500.00 |
.
| Units of Production method | ||
| A | Cost | $ 96,000 |
| B | Residual Value | $ 6,000 |
| C=A - B | Depreciable base | $ 90,000 |
| D | Usage in units(in Units) | 120000 |
| E | Depreciation per unit | $ 0.75 |
+.
| Depreciation schedule-Units of Activity | |||||
| Year | Book Value | Usage | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 1 | $ 96,000 | 43000 | $ 32,250 | $ 32,250 | $ 63,750 |
| 2 | $ 63,750 | 45000 | $ 33,750 | $ 66,000 | $ 30,000 |
.
| Double declining Method | ||
| Cost | $ 96,000 | |
| B | Residual Value | $ 6,000 |
| C=A - B | Depreciable base | $ 90,000 |
| D | Life [in years] | 4 |
| E=C/D | Annual SLM depreciation | $ 22,500 |
| F=E/C | SLM Rate | 25.00% |
| G=F x 2 | DDB Rate | 50.00% |
.
| Depreciation schedule-Double declining | |||||
| Year | Beginning Book Value | Depreciation rate | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 1 | $ 96,000 | 50.00% | $ 48,000 | $ 48,000 | $ 48,000 |
| 2 | $ 48,000 | 50.00% | $ 24,000 | $ 72,000 | $ 24,000 |
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