Answers
Correct Answer:
1: Straight line method:
| Straight line Method | ||
| A | Cost | $ 99,000.00 |
| B | Residual Value | $ 5,500.00 |
| C=A - B | Depreciable base | $ 93,500.00 |
| D | Life [in years left ] | 5 |
| E=C/D | Annual SLM depreciation | $ 18,700.00 |
| Year | Book Value | Depreciation expense | Ending Book Value | Accumulated Depreciation |
| 2017 | $ 99,000.00 | $ 18,700.00 | $ 80,300.00 | $ 18,700.00 |
| 2018 | $ 80,300.00 | $ 18,700.00 | $ 61,600.00 | $ 37,400.00 |
| 2019 | $ 61,600.00 | $ 18,700.00 | $ 42,900.00 | $ 56,100.00 |
| 2020 | $ 42,900.00 | $ 18,700.00 | $ 24,200.00 | $ 74,800.00 |
| 2021 | $ 24,200.00 | $ 18,700.00 | $ 5,500.00 | $ 93,500.00 |
2: Double-Declining method:
| Double declining Method | ||
| A | Cost | $ 1,10,000.00 |
| B | Residual Value | $ 10,500.00 |
| C=A - B | $ 99,500.00 | |
| D | Life [in years] | 4 |
| E=C/D | Annual SLM depreciation | $ 24,875.00 |
| F=E/C | SLM Rate | 25.00% |
| G=F x 2 | DDB Rate | 50.00% |
| Year | Beginning Book Value | Depreciation rate | Depreciation expense | Ending Book Value | Accumulated Depreciation |
| 1 | $ 1,10,000 | 50.00% | $ 55,350 | $ 54,650 | $ 55,350 |
| 2 | $ 54,650 | 50.00% | $ 27,325 | $ 27,325 | $ 82,675 |
| 3 | $ 27,325.00 | 50.00% | $ 13,662.50 | $ 13,662.50 | $ 96,337.50 |
| 4 | $ 13,662.50 | (13662.50 - 10500) | $ 3,162.50 | $ 10,500.00 | $ 99,500 |
3 :Units of Activity:
| Units of Activity method | ||
| A | Cost | $ 89,000.00 |
| B | Residual Value | $ 8,500.00 |
| C=A - B | Depreciable base | $ 80,500.00 |
| D | Usage in units(in Miles) | 115000 |
| E | Depreciation per Mile | $ 0.70 |
| Year | Book Value | Usage | Depreciation expense | Ending Book Value | Accumulated Depreciation |
| 1 | $ 89,000.00 | 23000 | $ 16,100.00 | $ 72,900.00 | $ 16,100.00 |
| 2 | $ 72,900.00 | 31000 | $ 21,700.00 | $ 51,200.00 | $ 37,800.00 |
| 3 | $ 51,200.00 | 30500 | $ 21,350.00 | $ 29,850.00 | $ 59,150.00 |
| 4 | $ 29,850.00 | 30500 | $ 21,350.00 | $ 8,500.00 | $ 80,500.00 |
End of answer.
Please give a thumbs-up, it will be highly appreciated.
Thanks.
.