Homework Answers
A) Straight line method
Amount of annual depreciation under straight line method is $5720 per annum.
Formula: (Cost - Residual Value)/No of years
=($122400-$8000)/20
=$5720
|
Useful information: Full schedule for 20 years |
||||
| Year | Start Value | Depreciation Expense | Accumulated Depreciation | End Value |
| Year-1 | $122,400.00 | $5,720.00 | $5,720.00 | $116,680.00 |
| Year-2 | $116,680.00 | $5,720.00 | $11,440.00 | $110,960.00 |
| Year-3 | $110,960.00 | $5,720.00 | $17,160.00 | $105,240.00 |
| Year-4 | $105,240.00 | $5,720.00 | $22,880.00 | $99,520.00 |
| Year-5 | $99,520.00 | $5,720.00 | $28,600.00 | $93,800.00 |
| Year-6 | $93,800.00 | $5,720.00 | $34,320.00 | $88,080.00 |
| Year-7 | $88,080.00 | $5,720.00 | $40,040.00 | $82,360.00 |
| Year-8 | $82,360.00 | $5,720.00 | $45,760.00 | $76,640.00 |
| Year-9 | $76,640.00 | $5,720.00 | $51,480.00 | $70,920.00 |
| Year-10 | $70,920.00 | $5,720.00 | $57,200.00 | $65,200.00 |
| Year-11 | $65,200.00 | $5,720.00 | $62,920.00 | $59,480.00 |
| Year-12 | $59,480.00 | $5,720.00 | $68,640.00 | $53,760.00 |
| Year-13 | $53,760.00 | $5,720.00 | $74,360.00 | $48,040.00 |
| Year-14 | $48,040.00 | $5,720.00 | $80,080.00 | $42,320.00 |
| Year-15 | $42,320.00 | $5,720.00 | $85,800.00 | $36,600.00 |
| Year-16 | $36,600.00 | $5,720.00 | $91,520.00 | $30,880.00 |
| Year-17 | $30,880.00 | $5,720.00 | $97,240.00 | $25,160.00 |
| Year-18 | $25,160.00 | $5,720.00 | $102,960.00 | $19,440.00 |
| Year-19 | $19,440.00 | $5,720.00 | $108,680.00 | $13,720.00 |
| Year-20 | $13,720.00 | $5,720.00 | $114,400.00 | $8,000.00 |
B) Double Declining Balance
First year depriciation: $12240
Second year depriciation: $11016
Assumption: As the depreciation percent is not given in the question, Taken as 10%
Calculations:
| Year | Book Value | Depreciation Percent | Depreciation Expense | Accumulated Depreciation | Book Value Year End |
| Year-1 | $122,400.00 | 10% | $12,240.00 | $12,240.00 | $110,160.00 |
| Year-2 | $110,160.00 | 10% | $11,016.00 | $23,256.00 | $99,144.00 |
| Year-3 | $99,144.00 | 10% | $9,914.40 | $33,170.40 | $89,229.60 |
| Year-4 | $89,229.60 | 10% | $8,922.96 | $42,093.36 | $80,306.64 |
| Year-5 | $80,306.64 | 10% | $8,030.66 | $50,124.02 | $72,275.98 |
| Year-6 | $72,275.98 | 10% | $7,227.60 | $57,351.62 | $65,048.38 |
| Year-7 | $65,048.38 | 10% | $6,504.84 | $63,856.46 | $58,543.54 |
| Year-8 | $58,543.54 | 10% | $5,854.35 | $69,710.81 | $52,689.19 |
| Year-9 | $52,689.19 | 10% | $5,268.92 | $74,979.73 | $47,420.27 |
| Year-10 | $47,420.27 | 10% | $4,742.03 | $79,721.76 | $42,678.24 |
| Year-11 | $42,678.24 | 10% | $4,267.82 | $83,989.58 | $38,410.42 |
| Year-12 | $38,410.42 | 10% | $3,841.04 | $87,830.62 | $34,569.38 |
| Year-13 | $34,569.38 | 10% | $3,456.94 | $91,287.56 | $31,112.44 |
| Year-14 | $31,112.44 | 10% | $3,111.24 | $94,398.81 | $28,001.19 |
| Year-15 | $28,001.19 | 10% | $2,800.12 | $97,198.93 | $25,201.07 |
| Year-16 | $25,201.07 | 10% | $2,520.11 | $99,719.03 | $22,680.97 |
| Year-17 | $22,680.97 | 10% | $2,268.10 | $101,987.13 | $20,412.87 |
| Year-18 | $20,412.87 | 10% | $2,041.29 | $104,028.42 | $18,371.58 |
| Year-19 | $18,371.58 | 10% | $1,837.16 | $105,865.57 | $16,534.43 |
| Year-20 | $16,534.43 | 10% | $1,653.44 | $107,519.02 | $14,880.98 |
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