xlschapter11

# xlschapter11 - FACTS FROM PROBLEM Cost Life Est Salvage...

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FACTS FROM PROBLEM COMPUTATIONS: DEPRECIABLE BASE Cost 260,000 Cost 260,000 Life 10 Less: estimated salv. V (20,000) Est Salvage value 20,000 Deprec. Base 240,000 * Productive life hours 60,000 * Careful, we don't use this for declining balance methods Yr 1 hours 6,000 Yr 2 hours 12,000 Denominator for sum of the years digits, based on 10 year life: Yr 3 hours 3,000 10 years=1+2+3+4+5+6+7+8+9+10= 55 STRAIGHT LINE: Depreciable base 240,000 Life 10 Annual depreciation 24,000 YR 1,2 & 3 Units this year 6,000 12,000 3,000 Depreciation is the same in Yr 1,2 & 3 at: 24,000 Total units 60,000 60,000 60,000 Percentage consumed 10% 20% 5% ACITIVITY: Yr. 1 Yr. 2 Yr. 3 Depreciable base 240,000 240,000 240,000 Units this year/ total estimated units 10% 20% 5% 24,000 48,000 12,000 SUM OF THE YEARS DIGITS Depreciable base 240,000 240,000 240,000 Years remaining/ Years total 10/55 9/55 8/55 Year/ Years total expressed as a decimal 0.1818 0.1636 0.1455 Depreciation expense 43,636 39,273 34,909 DOUBLE-DECLINING BALANCE Not covered in this example, see powerpoint presentation and text illustration 11-7

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xlschapter11 - FACTS FROM PROBLEM Cost Life Est Salvage...

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