2) An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years. a) Determine the book value for year 3 using sum-of-the-years-digits depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.

2) An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years. a) Determine the book value for year 3 using sum-of-the-years-digits depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 9MC: A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use...

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A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
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. Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage: (a) 4 years, (b) 8 years, (c) 10 years, (d) 16 years, (e) 25 years, (f) 40 years, (g) 50 years. Equipment with a cost of $200,000 has an estimated residual value of $10,000, has an estimated useful life of 19 years, and is depreciated by the straight-line method. (a) Determine the amount of the annual depreciation. (b) Determine the book value at the end of the tenth year of use. (c) Assuming that at the start of the eleventh year the remaining life is estimated to be eight years and the residual value is estimated to be $10,500, determine the depreciation expense for each of the remaining eight years.
Use the appropriate function in Excel (=SLN) to calculate the annual straight-line (SL) depreciationcharge for an asset that has a $10,000 acquisition cost, an estimated salvage value of $500, and auseful life of 4 years.
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Suppose a manufacturing company bought a machine for RM10,000,000. They have estimated the useful life of the machine to be 8 years with a salvage value of RM2,000,000. a. Calculate the annual depreciation of the asset using the straight-line method. b.Determine the annual depreciation using the double-declining balance method. Use the given table (below) to fill in the book value (beginning of each year), amount of annual depreciation and the book value (end of each the year) Year Book value (beginning of year) Depreciation Book value (end of year) 1 2 3 4 5 6 7 8