Chapter 17.I, Problem 17RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Vanguard Manufacturing, Inc., purchased production-line machinery for $445,000. It is expected to last for 6 years and have a trade-in value of $25,000. Using the sum-of-the-years’ digits method, prepare a depreciation schedule for Vanguard.

**Vanguard Manufacturing, Inc. SYD Depreciation Schedule Production-Line Machinery**

End of |
Total |
Depreciation |
Annual |
Accumulated |
Book |

Year |
Depreciation |
Rate Fraction |
Depreciation |
Depreciation |
Value |

1 | (new) | ||||

2 | |||||

3 | |||||

4 | |||||

5 | |||||

6 |

To determine

**To calculate:** The depreciation schedule for Vanguard Manufacturing when the total cost of production-line machinery is

Explanation

**Given Information:**

The total cost of production-line machinery is

**Formula used:**

The steps to prepare depreciation schedule by the sum-of-the-years digits method are as follows:

Step 1: Calculate the total amount of depreciation by subtracting salvage value from the total cost.

The total amount of depreciation is:

Step 2: Calculate the SYD depreciation rate fraction by dividing each year from years of useful life remaining.

The SYD depreciation rate fraction is:

Step 3: Calculate the annual depreciation by multiplying total amount of depreciation by the depreciation rate fraction.

The total amount of annual depreciation is:

Step 4: Prepare the depreciation schedule in form of chart.

**Calculation:**

Consider the total cost of production-line machinery is

The total amount of depreciation is:

Now, using the above formula, the total amount of depreciation is:

The SYD depreciation rate fraction is:

Now, using the above formula, the SYD depreciation rate fraction is:

The total amount of annual depreciation is:

Now, using the above formula, the total amount of annual depreciation for 1^{st} year is:

The accumulated depreciation for 1^{st} year is the same as annual depreciation for 1^{st} year:

The ending book value is the subtraction of accumulated depreciation of that year from the original cost

Sect-17.I P-1TIESect-17.I P-2TIESect-17.I P-3TIESect-17.I P-4TIESect-17.I P-1RESect-17.I P-2RESect-17.I P-3RESect-17.I P-4RESect-17.I P-5RESect-17.I P-6RE

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