Prorating Depreciation when asset not purchased_Notes

# Prorating Depreciation when asset not purchased_Notes -...

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Prorating Depreciation when asset not purchased on January 1 Example 1 : Equipment purchased April 1 of the year Cost \$14,000 Residual 2,000 Life 3 years Straight line depreciation Full year depreciation (14000-2000=12000/3= 4000 depreciation Prorata for first year… 9/12 of 4000 or 3000 Be careful how you count the months!!! Example 2 : Same information, but uses Units of Production method that has 15000 hour life, and 3000 hours used this year… No Impact of part year use, would already be reflected in hours used.

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Example 3
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Unformatted text preview: : Double Declining Balance method Equipment Purchased on October 1 of year Cost…. \$120,000 Residual 10,000 Life 4 years Full year depreciation \$120,000 x (2 x 25%) or 60,000. For prorated year it is 60,000 x 3/12 or \$ 15,000. What is depreciation for year two? Full year is (\$120,000-60,000) x (2x25%) or 30,000… For year two it is two pieces… balance of year one and first part of year two calculation! (60,000-15,000= 45,000) plus (3/12 of 30,000)= 7,500 totaling 52,500 for year 2...
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## This note was uploaded on 02/20/2009 for the course AEM 221 taught by Professor Little,j. during the Fall '08 term at Cornell.

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Prorating Depreciation when asset not purchased_Notes -...

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