04-04-12Class22 EndCh11 begin Ch 16 dilutive secb

Depreciation method of cost allocation depreciation

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of use or production). Hybrid or combination methods. Accelerated methods Special methods LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Activity Method Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Illustration: If Stanley uses the crane for 4,000 hours the first year, the depreciation charge is: Illustration 11-3 Chapter 18-14 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Straight-Line Method Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Illustration: Stanley computes depreciation as follows: Illustration 11-4 Chapter 18-15 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Decreasing-Charge Methods Includes SYD & DDB Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Sum-of-the-Years’-Digits. Each fraction uses the sum of the years as a denominator (5 + 4 + 3 + 2 + 1 = 15). The numerator is the number of years of estimated life remaining as of the beginning of the year. Chapter 18-16 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Sum-of-the-Years’-Digits Illustration 11-6 Chapter 18-17 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Double Declining-Balance Method. Double Declining-Balance Method. Double Decreasing-Charge Methods Includes SYD & DDB Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Declining-Balance Method. Utilizes a depreciation rate (percentage) that is some multiple of the straight­line method. Chapter 18-18 Does not deduct the salvage value in computing the depreciation base. LO 3 Compare activity, straight-line, and decreasingLO charge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Double Declining-Balance Method Illustration 11-7 Chapter 18-19 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation E11-5 (Depreciation Computations—Four Methods): KC Corporation purchased a new machine for its assembly process on August 1, 2010. The cost of this machine was $150,000. The company estimated that the machine would have a salvage value of $24,000 at the end of its service life. Its life is estimated at 5 years and its working hours are estimated at 21,000 hours. Year­end is December 31. Instructions: Compute the depreciation expense under the following methods. (a) Straight­line depreciation. (c) Sum­of­the­years’­digits. (b) Activity method (d) Double­declining balance. Chapter 18-20 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Straight-line Method Year Depreciable Base Annual Expense 2010 $ 126, 000 / 5 = $ 25, 200 2 011 126, 000 / 5 = 2 012 126, 000 / 5 2 013 126,...
View Full Document

Ask a homework question - tutors are online