Sum-of-Years' Digits, Declining Balance Cost of Equipment: $750,000 Estimated Salvage Value: $70,000 Estimated Life (yrs): 16...

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Sum-of-Years' Digits, Declining Balance Cost of Equipment: $750,000 Estimated Salvage Value: $70,000 Estimated Life (yrs): 16...

Sum-of-Years' Digits, Declining Balance

Cost of Equipment: $750,000

Estimated Salvage Value: $70,000

Estimated Life (yrs): 16

Sold after this many years: 10

Selling price of equipment: $180,000

---------------------

Please fill out the blanks bellow,

A.

Depreciable Cost
Sum of years digits (life)
Sum of years digits (yrs remaining)
Declining balance rate

B.

Depreciation Expense	SYD Method	DB Method
Year 2
Year of sale
At time of sale	SYD Method	DB Method
Accumulated Depreciation
Book Value

C.

ENTRY (SYD Method):
DR Account	CR Account	DR Amount	CR Amount

business accounting

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Answer 1

Answer #1

A. Depreciable Cost= $750000-$70000= 680000

Sum of years digit (Life)= 1+2+3+4+5+6+7+8+9+10+11+12+13+14+15+16=136

Sum of years digit (Yrs remaining)= 11+12+13+14+15+16= 81

Declining balance rate= 100/16= 6.25%

B.

Depreciation exp	SYD method	DB Method
Year 2	75000 (750000-70000)x16/136	43945 (703125x6.25%) Note: 750000-6.25%=703125
year of sale (i.e. for year 11)	30000 (750000-70000)x6/136	24584 (393345x6.25%)
At the time of sale	SYD method	DB method
Accumulated Depreciation	575000	356655
Book value	175000	393345

C. Entry under SYD Method:

Year 1 = Depreciation A/c. ---Dr. 80000

to Accumulated Depreciation / fixed assets A/c. 80000

Like the above entry ; each year depreciation entry will be done.

Depreciation schedule for the assets(for 10 years):

Year	Depreciation Base	Remaining Life of machine	Depreciation Fraction	Depreciation Expense
1	680000	16	16/136	80000
2	680000	15	15/136	75000
3	680000	14	14/136	70000
4	680000	13	13/136	65000
5	680000	12	12/136	60000
6	680000	11	11/136	55000
7	680000	10	10/136	50000
8	680000	9	9/136	45000
9	680000	8	8/136	40000
10	680000	7	7/136	35000

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Answer 2

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