301C9gp - Book value = cost – accumulated depreciation Rate =(1 life in years x 2 Å put rate into decimal form 1 2005(696,000 – 96,000 20 =

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Acct 301 Chapter 9 Group Activity Answer Key (P1A) 301C9gp.doc/jun’09/Burbage Item # Account classification Amount 1 land 280,000 2 fence – land improvement 6,800 3 land 24,000 4 building 23,000 5 land 2,179 6 parking lot – land improvements 29,000 7 building 33,000 8 property tax expense 5,800 9 building 640,000 Cost of building from above is $696,000 Assume: salvage value is $96,000 and life is 20 years Required: 1. Calculate depreciation expense for years 2005-2007 using SL beginning 1/1/05. 2. Calculate depreciation expense for years 2005-2007 using SL beginning 9/30/05. 3. Calculate depreciation expense for years 2005-2007 using DDB beginning 1/1/05. 4. Calculate depreciation expense for years 2005-2007 using DDB beginning 9/30/05. SL depreciation formula: (cost – salvage value) / life in years = depreciation for 1 year DDB depreciation formula: book value x rate = depreciation for 1 year
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Unformatted text preview: Book value = cost – accumulated depreciation Rate = (1 / life in years) x 2 Å put rate into decimal form 1. 2005: (696,000 – 96,000) / 20 = 30,000 2006: 30,000 same as above – note SL is always the same amount for each full year 2007: 30,000 same as above 2. 2005: (696,000 – 96,000) / 20 x 3/12* = 7,500 2006: 30,000 – same as #1 above 2007: 30,000 – same as #1 above DDB Rate for 20 year asset = (1/20) x 2 = .10 3. 2005: (696,000 – 0) x .10 = 69,600 2006: (696,000 – 69,600) x .10 = 62,640 2007: (696,000 – [69,600 + 62,640]) x .10 = (696,000 – 132,240) x .10 = (563,760) x .10 = 56,376 4. 2005: (696,000 – 0) x .10 x 3/12* = 17,400 2006: (696,000 – 17,400) x .10 = 67,860 2007: (696,000 – [17,400 + 67,860]) x .10 = (696,000 – 85,260) x .10 = (610,740) x .10 = 61,074 *9/30/05 to 12/31/05 = 3/12 of a year...
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This note was uploaded on 12/14/2010 for the course BUS 3103 taught by Professor Nugent during the Spring '09 term at Texas Woman's University.

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