dep-example2[1] - Depreciation rate Depreciation expense...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Depreciation Example 2 Cost 220,000 $ Salvage value 38,000 $ Useful life 5 Purchase date January 1, 2006 Straight line depreciation Year Depreciation 2006 36,400 $ =($220,000 - $38,000) x 1/5 2007 36,400 $ =($220,000 - $38,000) x 1/5 2008 36,400 $ =($220,000 - $38,000) x 1/5 2009 36,400 $ =($220,000 - $38,000) x 1/5 2010 36,400 $ =($220,000 - $38,000) x 1/5 Total 182,000 $ Double declining depreciation Depreciation rate 40% =1/5 x 200% Year Book value at the beginning of year Depreciation rate Depreciation expense Accumulated depreciation Book value at year-end 2006 220,000 $ 40% 88,000 $ 88,000 $ 132,000 $ 2007 132,000 $ 40% 52,800 $ 140,800 $ 79,200 $ 2008 79,200 $ 40% 31,680 $ 172,480 $ 47,520 $ 2009 47,520 $ 40% 9,520 $ (*1) 182,000 $ 38,000 $ 2010 38,000 $ 40% - $ 182,000 $ 38,000 $ Total 182,000 $ (*1) Depreciation stops when accumulated depreciation reaches depreciation base. Depreciation base = cost - salvage value = $220,000 - $38,000 = $182,000 150% declining depreciation Depreciation rate 30% =1/5 x 150% Year Book value at the beginning of year
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Depreciation rate Depreciation expense Accumulated depreciation Book value at year-end 2006 220,000 $ 30% 66,000 $ 66,000 $ 154,000 $ 2007 154,000 $ 30% 46,200 $ 112,200 $ 107,800 $ 2008 107,800 $ 30% 32,340 $ 144,540 $ 75,460 $ 2009 75,460 $ 30% 22,638 $ 167,178 $ 52,822 $ 2010 52,822 $ 30% 14,822 $ (*2) 182,000 $ 38,000 $ Total 182,000 $ (*2) Depreciation stops when accumulated depreciation reaches depreciation base. Depreciation base = cost - salvage value = $220,000 - $38,000 = $182,000 Sum-of-the-years'-digits depreciation Sum of the years' digits 15 =1+2+3+4+5 Year Years' digits Depreciation 2006 5 60,667 $ =($220,000 - $38,000) x 5/15 2007 4 48,533 $ =($220,000 - $38,000) x 4/15 2008 3 36,400 $ =($220,000 - $38,000) x 3/15 2009 2 24,267 $ =($220,000 - $38,000) x 2/15 2010 1 12,133 $ =($220,000 - $38,000) x 1/15 Total 15 182,000 $ Copyright 1999-2009 by AccountingStudy.com. TM Page 1 of 1...
View Full Document

Ask a homework question - tutors are online