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BUS271
HW CH:17
CH:17
17-3
a. Straight-Line
Depreciation per year = cost - salvage value / Useful Life
Depreciation per year = 6,500 - 500/ 5
Depreciation per year = $1,200
b. Double-declining-Balance:
Years
1
2
3
4
5
Beginning
value
DDB computation
DDB Rate
$
6,500
0.40 $6,500 x 0.40 = $2,600
$
3,900
0.40 $3,900 x .40 = $1,560
$
2,340
0.40 $2,340 x .40 = $ 936
$
1,404
0.40 $1,404 x .40 = $561.60
$ 842.40
$842.40 - 500 = $42.40
Total depreciation = $5,700
Ending
book Value
$
3,900
$
2,340
$
1,404
$ 842.40
$
500
c. Units-of-production:
Depreciation per unit: Cost - salvage value / estimated life in units
Depreciation per unit: 6,500 - 500 / 8,400 = .71
Year 1: depreciation for 1,050 hours = 1,050 x .71 = $745.50
Year 2: depreciation for 500 hours = 500 x .71 = $355
17-5
28-Apr
Depreciation Expense
Accumulated Depreciation
28-Apr Accumulated Depreciation
Office equipment
Loss on disposal
Office Equipment
Discarded the equipment
$7,300
$7,300
$7,300
0
$7,300
17-1A
a.
Straight-Line Method
Purchase
Price
$28,000
Year
Annual Depreciation
25,000
b.
Double-Declining-Balance Method
Purchase Price:
Depreciation Rate:
Year
Annual Depreciation
$10,100 x .40 =
$6.060 x .4 = $2,424
c.
25,000
Units-of-Production Method
Purchase Price:
Depreciable Cost:
Useful Life (miles):
Depreciation per Unit:
Year
Units Used
10000 x .25 =
20000 x .25=
40000 x .25 =
18000 x .25 =
12000 x .25 =
e Method
Salvage
Depreciable
Value
Cost
$3,000
$5,000
Accumulated
Depreciation
Book Value
at End of
Year
5,000
23,000
10,000
18,000
15,000
13,000
20,000
8,000
25,000
3,000
Balance Method
$28,000
40%
Accumulated
Depreciation
Book Value
at End of
Year
11,200
16,800
6,700
10,100
4,040
6,060
2,424
3,636
636
3,000
nits-of-Production Method
$28,000
iable Cost:
100,000
$0.25
Annual
Depreciation
$
2,500
Accumulated
Depreciation
$
Book Value
at End of
Year
2,500
25,500
5,000
7,500
20,500
10,000
17,500
10,500
4,500
22,000
6,000
3,000
25,000
3,000
25,000