Comparing depreciation methods

Comparing depreciation methods - Straight-Line Depreciation...

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Comparing depreciation methods.  All depreciation methods are designed to systematically  allocate the depreciable cost of an asset to expense during the asset's useful life. Although total  depreciation expense is the same no matter what depreciation method is used, the methods differ  from each other in the specific assignment of depreciation expense to each year or accounting  period, as shown in the following comparison of annual depreciation expense over five years using a  truck's depreciable cost of $80,000.  Annual Depreciation Expense
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Unformatted text preview: Straight-Line Depreciation Units-of-Activity Depreciation Sum-of-the-Years'-Digits Depreciation Double-Declining-Balance Depreciation Year 1 $16,000 $22,000 $26,667 $36,000 Year 2 16,000 14,000 21,333 21,600 Year 3 16,000 18,000 16,000 12,960 Year 4 16,000 16,000 10,667 7,776 Year 5 16,000 10,000 5,333 1,664 $80,000 $80,000 $80,000 $80,000 The sum-of-the-years'-digits and double-declining-balance methods are called accelerated depreciation methods because they allocate more depreciation expense to the first few years of an asset's life than to its later years....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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