dep-example1[1]

dep-example1[1] - of year Depreciation rate Depreciation...

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

Depreciation Example 1 Cost 110,000 \$ Salvage value 20,000 \$ Useful life 5 Purchase date January 1, 2006 Straight line depreciation Year Depreciation 2006 18,000 \$ =(\$110,000 - \$20,000) x 1/5 2007 18,000 \$ =(\$110,000 - \$20,000) x 1/5 2008 18,000 \$ =(\$110,000 - \$20,000) x 1/5 2009 18,000 \$ =(\$110,000 - \$20,000) x 1/5 2010 18,000 \$ =(\$110,000 - \$20,000) x 1/5 Total 90,000 \$ Double declining balance 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 110,000 \$ 40% 44,000 \$ 44,000 \$ 66,000 \$ 2007 66,000 \$ 40% 26,400 \$ 70,400 \$ 39,600 \$ 2008 39,600 \$ 40% 15,840 \$ 86,240 \$ 23,760 \$ 2009 23,760 \$ 40% 3,760 \$ (*1) 90,000 \$ 20,000 \$ 2010 20,000 \$ 40% - \$ 90,000 \$ 20,000 \$ Total 90,000 \$ (*1) Depreciation stops when accumulated depreciation reaches depreciation base. Depreciation base = cost - salvage value = \$110,000 - \$20,000 = \$90,000 150% declining balance depreciation Depreciation rate 30% =1/5 x 150% Year Book value at the beginning
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of year Depreciation rate Depreciation expense Accumulated depreciation Book value at year-end 2006 110,000 \$ 30% 33,000 \$ 33,000 \$ 77,000 \$ 2007 77,000 \$ 30% 23,100 \$ 56,100 \$ 53,900 \$ 2008 53,900 \$ 30% 16,170 \$ 72,270 \$ 37,730 \$ 2009 37,730 \$ 30% 11,319 \$ 83,589 \$ 26,411 \$ 2010 26,411 \$ 30% 6,411 \$ (*2) 90,000 \$ 20,000 \$ Total 90,000 \$ (*2) Depreciation stops when accumulated depreciation reaches depreciation base. Depreciation base = cost - salvage value = \$110,000 - \$20,000 = \$90,000 Sum-of-the-years'-digits depreciation Sum of the years' digits 15 =1+2+3+4+5 Year Years' digits Depreciation 2006 5 30,000 \$ =(\$110,000 - \$20,000) x 5/15 2007 4 24,000 \$ =(\$110,000 - \$20,000) x 4/15 2008 3 18,000 \$ =(\$110,000 - \$20,000) x 3/15 2009 2 12,000 \$ =(\$110,000 - \$20,000) x 2/15 2010 1 6,000 \$ =(\$110,000 - \$20,000) x 1/15 Total 15 90,000 \$ Copyright © 1999-2009 by AccountingStudy.com. TM Page 1 of 1...
View Full Document

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern