5e9bc73d53fc2713fba5f18a75316a7caf207705.xlsx, Exercise 11-1 Solution, Page 1 of 10, 03/29/2012, 01:32:28
Name:
Solution
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 = SLN(Cost,Salvage,Life) = SLN(E17,E18,E20) = $39,000
Area for Excel calculations as desired.
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
Excel formula = SYD(Cost,Salvage,Life,Period) = SYD(E38,E39,E43,D43) = $72,000 for year 1
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%
$86,333
$431,667
2
431,667
16.67%
71,944
359,722
3
359,722
16.67%
59,954
299,769
Excel formula = DDB(Cost,Salvage,Life,Period,Factor) = DDB(E63,E64,E65,C71) = $86,333 for year 1
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 Computations—SL, 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.
Beginning
Balance
Double
Declining
rate:
Annual
Depreciation
Amount:
Ending
Balance