Question

For both problems below use straight line and double declining balance(Chapter 9) 4-A- Consider the following data on an asset Cost of the asset is 132,000 Useful life 5 years Salvage value 20,000 4-B- consider the following data Cost of the asset $ 50,000 Useful life 7yewars Salvage value $50

Answer 1

1
a.	Straight Line Method
	Year	Book Value year start	Depreciation Life	Depreciation Exp.	Acc. Dep	Book Value year-end
	1	$132,000	5	$22,400	$22,400	$109,600
	2	$109,600	5	$22,400	$44,800	$87,200
	3	$87,200	5	$22,400	$67,200	$64,800
	4	$64,800	5	$22,400	$89,600	$42,400
	5	$42,400	5	$22,400	$112,000	$20,000
	Depreciation per year (132,000 - 20,000)/5 years = 22,400
b	Double Declining Balance Method
	Year	Book Value year start	Depreciation Rate	Depreciation Exp.	Acc. Dep	Book Value year-end
	1	$132,000	40.00%	$52,800	$52,800	$79,200
	2	$79,200	40.00%	$31,680	$84,480	$47,520
	3	$47,520	40.00%	$19,008	$103,488	$28,512
	4	$28,512	29.85%	$8,512	$112,000	$20,000
	5	$20,000	0.00%	$0	$112,000	$20,000
2
a.	Straight Line Method
	Year	Book Value year start	Depreciation Life	Depreciation Exp.	Acc. Dep	Book Value year-end
	1	$50,000	7	$7,136	$7,136	$42,864
	2	$42,864	7	$7,136	$14,272	$35,728
	3	$35,728	7	$7,136	$21,408	$28,592
	4	$28,592	7	$7,136	$28,544	$21,456
	5	$21,456	7	$7,136	$35,680	$14,320
	6	$14,320	7	$7,136	$42,816	$7,184
	7	$7,184	7	$7,134	$49,950	$50
	Depreciation per year (50,000 - 50)/7 years = 7,136
b	Double Declining Balance Method
	Year	Book Value year start	Depreciation Rate	Depreciation Exp.	Acc. Dep	Book Value year-end
	1	$50,000	28.57%	$14,286	$14,286	$35,714
	2	$35,714	28.57%	$10,204	$24,490	$25,510
	3	$25,510	28.57%	$7,289	$31,778	$18,222
	4	$18,222	28.57%	$5,206	$36,985	$13,015
	5	$13,015	28.57%	$3,719	$40,703	$9,297
	6	$9,297	28.57%	$2,656	$43,359	$6,641
	7	$6,641	28.57%	$1,897	$45,257	$4,743