hwk12005 - I. ASSET VALUATION AND DEPRECIATION EXERCISES I...

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I. ASSET VALUATION AND DEPRECIATION EXERCISES I STRAIGHT LINE DEPRECIATION The first two problems provide a closer look at Straight Line versus Double Declining Balance Depreciation. In these problems, assume all machinery is bought at the first of the year. Machine Cost Salvage Value Useful Life 1) Tractor A 50,000 20,000 5 2) Tractor B 60,000 0 5 3) Combine 84,000 0 7 ________________________________________________________________ Assume you own the machinery above. Calculate annual depreciation using the straight-line method. Tractor A Tractor B Combine Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
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II. DOUBLE DECLINING BALANCE Now Calculate annual depreciation on this machinery using double declining balance. Be careful not to exceed the salvage value. If the salvage value is zero, switch to straight-line in the year when straight-line yields higher depreciation. (Use the remaining value as the starting point when you change.) Tractor A Tractor B Combine Year 1 Year 2 Year 3 Year 4 Year 5
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hwk12005 - I. ASSET VALUATION AND DEPRECIATION EXERCISES I...

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