Samoa Corporation's schedule of depreciable assets at December 31, Year 3
Samoa Corporation's schedule of depreciable assets at December 31, Year 3, is shown in the next column. Samoa takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of an asset's disposition. The estimated useful life of each depreciable asset is 5 years.
Samoa depreciates asset A on the double-declining-balance method. How much depreciation expense should Samoa record in Year 4 for asset A?
A. $32,000 B. $24,000 C. $14,400 D. $1,600
Using the same depreciation method as used in Year 1, Year 2, and Year 3, how much depreciation expense should Samoa record in Year 4 for asset B?
A. $6,000 B. $9,000 C. $12,000 D. $15,000
Homework Answers
[11] Answer: C. $14,400
Straight-line depreciation rate = 100%/5 years = 20%
Double-declining depreciation rate = 2 x 20% = 40%
Book value at the beginning of Year 4 = Cost – Accumulated depreciation = $100,000 - $64,000 = $36,000
Depreciation expense for Year 4 = 40% x $36,000 = $14,400
[12] Answer: A. $6,000
The depreciation method used for Asset B is the sum-of-the-year’s-digits method.
Sum of the year’s digits = 5 + 4 + 3 + 2 + 1 = 15
Depreciable value = Cost – Salvage value = $55,000 - $10,000 = $45,000
Depreciation for Year 4 = $45,000 x 2/15 = $6,000
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Samoa Corporation's schedule of depreciable assets at December 31, Year 3
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