Question

Waterway Company purchases equipment on January 1, Year 1, at a cost of $582,000. The asset is expected to have a service life of 12 years and a salvage value of $52,380.

Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to 0 decimal places, e.g. 5,125.)

Depreciation for Year 1		$enter a dollar amount rounded to 0 decimal places
Depreciation for Year 2		$enter a dollar amount rounded to 0 decimal places
Depreciation for Year 3		$enter a dollar amount rounded to 0 decimal places

  

  

Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method.

Depreciation for Year 1		$enter a dollar amount
Depreciation for Year 2		$enter a dollar amount
Depreciation for Year 3		$enter a dollar amount

  

  

Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (Round depreciation rate to 2 decimal places, e.g. 15.84%. Round answers to 0 decimal places, e.g. 45,892.)

Depreciation for Year 1		$enter a dollar amount rounded to 0 decimal places
Depreciation for Year 2		$enter a dollar amount rounded to 0 decimal places
Depreciation for Year 3		$enter a dollar amount rounded to 0 decimal places

Answer 1

1)
Annual Depreciation = (Cost Of The Asstes- Salvage Value)/ Life Of The Asset
= $582000-52380/12 years
= $44135 per year
Year	Depreciation Expenses
1	$                               44,135
2	$                               44,135
3	$                               44,135
2)	Sum of digit method
Depreciable amount = $582000-52380 =$529620
Year	sum of digit	Deprecition
a	b	c=529620*b/78
1	12	$                81,480
2	11	$                74,690
3	10	$                67,900
4	9	$                61,110
5	8	$                54,320
6	7	$                47,530
7	6	$                40,740
8	5	$                33,950
9	4	$                27,160
10	3	$                20,370
11	2	$                13,580
12	1	$                  6,790
78
3)
Double Declining Balance Method
Useful Life		12	Years
Cost		$            5,82,000
Residual Value		$                52,380
Depreciable Value		$            5,29,620
Depreciation Rate		16.67%
Year	Depreciation Expenses	Acc Depreciation	Book Value End Of Year
1	$                               97,019	$                97,019	$                            4,84,981
2	$                               80,846	$            1,77,866	$                            4,04,134
3	$                               67,369	$            2,45,235	$                            3,36,765