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ac50b0c3a484f118365cffbee937234c497cd24c.xlsx, Exercise 11-1, Page 1 of 5, 03/05/2012, 12:32:05 Name: Date: Instructor: Course: January 1, Year 1, at a cost of $518,000 . The asset is expected to have a service life of 12 years and a salvage value of $50,000 Instructions: Straight-line method depreciation for each of Years 1 through 3 is computed as: Cost: $518,000 Salvage value: 50,000 Depreciable value: 468,000 Asset life: (Years) 12 Annual straight-line depreciation value: $39,000 Excel formula for straight-line depreciation is =SLN(Cost,Salvage,Life) Area for Excel calculations as desired. $39,000.00 Cost: $518,000 Salvage value: 50,000 Depreciable value: 468,000 Denominator Depreciation expense for year: 1 12 78 $72,000 Depreciation expense for year: 2 11 78 $66,000 Depreciation expense for year: 3 10 78 $60,000 The Excel formula for Sum-of-Years-Digits Depreciation is =SYD(Cost,Salvage,Life,Period) Depreciation expense for year: 1 $72,000.00 Depreciation expense for year: 2 $66,000.00 Depreciation expense for year: 3 $60,000.00 Cost: $518,000 Salvage value: 50,000 Asset life: (Years) 12 Annual Straight-line Depreciation rate: 8.33% Double-Declining factor: 200% Double-Declining annual rate: 16.67% Year: 1 $518,000 16.67% $86,351 $431,649 2 431,649 16.67% $71,956 359,693 3 359,693 16.67% $59,961 299,732 The Excel formula for Accelerated Depreciation is =DDB(Cost,Salvage,Life,Period,Factor) 1 $86,333 2 $71,944 3 $59,954 Note: Minor differences may occur due to rounding and significant digits. Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse E11-1 (Depreciation ComputationsSL, SYD, DDB) Lansbury Company purchases equipment on (a) Compute the amount of depreciation for each Years 1 through 3 using the straight-line depreciation method. (b) Compute the amount of depreciation for each Years 1 through 3 using the sum-of-years digits depreciation method. The sum of 1 through 12 = 1+2+3+4+5+6+7+8+9+10+11+12 = 1+12 + 2+11 + 3+10 + 4+9 + 5+8 + 6+7 = (1+12) + (2+11) + (3+10) + (4+9) + (5+8) + (6+7) = (13) + (13) + (13) + (13) + (13) + (13) = 13 X (12/2) = 13 X 6 = 78 the sum of the first year and the last year multiplied by one half of the total number of years. Hint: Since "Sum-of-Years-Digits" title contains an "S", use salvage value to compute periodic depreciation expense. Numerator / Year Period Depreciation (c) Compute the amount of depreciation for each Years 1 through 3 using the double-declining balance method. (In performing your calculations, round constant percentage to the nearest one-hundredth of a point and round answers to the nearest dollar.) Hint: Since "Double-Declining Balance Method" title does not contain an "S", do not use salvage value to compute periodic depreciation expense. However, ensure that book value does not violate salvage value.... View Full Document
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