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Week 5 Disccssion 2

# Week 5 Disccssion 2 - = 12.5 x 200 = 25 Book Value Dep Rate...

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E11-5 Asset Cost Residual Service Life Depreciation Depreciation Value (Years) Method (Year 2) A 100,000 20,000 5 DDB \$ 24,000 B \$40,000 4,000 8 SYD 7,000 C 65,000 5,000 10 SL 6,000 D 230,000 10,000 10 SL 22,000 E 200,000 20,000 8 150%DB \$30,468.75 A. Depreciation @ year 1 = \$100,000 x 40% = \$40,000 Depreciation @year 2 = \$100,000 - \$40,000 = \$60,000 x 40% = \$24,000 B. \$40,000 - x = \$36,000 \$40,000 - \$4,000 = \$36,000 1+2+3+4+5+6+7+8 = 36 C. \$65,000-\$5,000/X = \$6,000 \$60,000/6,000 = 10 D. \$230,000-\$10,000/X = \$22,000 \$220,000/\$22,000 = 10 = SL E. 1/8 = 12.5 x 150% = 18.75% \$200,000 x 18.75 = \$37,500 \$200,000 - \$37,500 = \$162,500 \$162,500 x 18.75 = \$30,468.75 E11-10 1. Calculate depreciation for each year of the asset’s eight-year life. Purchase price \$154,000 Freight charges 2,000 Installation charges 4,000 \$160,000 Useful life = 8 = 1/8

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Unformatted text preview: = 12.5% x 200% = 25% Book Value Dep Rate Depreciation Acc. Depreciation Asset Value 1 160,000 25% 40,000 40,000 120,000 2 120,000 25% 30,000 70,000 90,000 3 90,000 25% 22,500 92,500 67,500 4 67,500 25% 16,875 109,375 50,625 Switch to SL = 50,625 30,625 = 20,000 and 20,000/4 years = \$5,000 5 \$20,000 5,000 114375 15,000 6 \$20,000 5,000 119375 10,000 7 \$20,000 5,000 124375 5,000 8 \$20,000 5,000 129375 2. Discuss the accounting treatment of the depreciation on the equipment. This treatment of depreciation make the depreciation look completely different then how is started because they are extremely different. Once the change is made it should be stated on the financials as a disclosure note....
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Week 5 Disccssion 2 - = 12.5 x 200 = 25 Book Value Dep Rate...

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