Question

I would only need help with problem 9-5A!! Thank you again!:)

roblem s-A calculating depreciation-partial perlods LO2,3 eXcel CHECK FIGURES: DDB 2014 $110,400 West Coast Tours runs boat tours along the West Coast of British Columbia. On March 5, 2017, it pur- chased, with cash, a cruising boat for $828,000, having a useful life of 10 years or 13,250 hours, witha residual value of $192,000. The company's year-end is December 31. 652

Answer 1

Solution 9-5A:

Cost of boat = $828,000

Residual value = $192,000

Depreciable cost = $828,000 - $192,000 = $636,000

Useful life = 10 years

Depreciation rate- SLM = 1/10 = 10%

Straight line method:

Depreciation for 2017 = $636,000*10%*6/12 = $31,800

Depreciation for 2018 = $636,000*10% = $63,600

Depreciation for 2019 = $636,000*10% = $63,600

Double declining balance method:

Depreciation rate DDB =10%*2 = 20%

Depreciation for 2017 = $828,000*20%*6/12 = $82,800

Depreciation for 2018 = ($828,000 - $82,800) * 20% = $149,040

Depreciation for 2019 = ($828,000 - $82,800 - $149,040) * 20% = $119,232

Units of Production method:

Depreciation for 2017 = $636,000*720 /13250 = $34,560

Depreciation for 2018 = $636,000*1780/13250 = $85,440

Depreciation for 2019 = $636,000*1535/13250 = $73,680