1. A machine has a first cost of $15,000. At the end of 4 years, it can be salva
ID: 1098368 • Letter: 1
Question
1. A machine has a first cost of $15,000. At the end of 4 years, it can be salvaged for $3,500. What is the depreciation schedule for Year 1 (
that is
what depreciation can you claim) using Straight Line (SL) to the nearest dollar?
2.A machine has a first cost of $15,000. At the end of 4 years, it can be salvaged for $3,500. What is the depreciation schedule for Year 1 (that is
what depreciation can you claim) using Sum-Of-The-Years digits (SOYD)?
3.A machine has a first cost of $15,000. At the end of 4 years, it can be salvaged for $3,500. What is the depreciation schedule for Year 1 (
that is
what depreciation can you claim) using DOuble-Declining Balance, (DDB) to the nearest dollar?
4.A machine has a first cost of $15,000. At the end of 4 years, it can be salvaged for $3,500. What is the depreciation schedule for Year 1 (
that is
what depreciation can you claim) using CCA Class 43 (30%)?
5.A machine has an expected life of 5 years with no salvage value. Engineer Ernie has computed 5 depreciation schedules as follows:
Year A B C D E
1 45 35 21.75 58.00 43.50
2 36 20 36.98 34.80 30.45
3 27 30 25.88 20.88 21.32
4 18 30 18.12 12.53 14.92
5 9 20 12.68 7.52 10.44
6 8.36
What is the initial cost of the machine, B? Be careful. Schedules A and B will tell you (B-S) only. Schedule C will give the right answer for B.
P.S PLEASE SHOW ME FULL SOLUTION TO GET POINT
Explanation / Answer
1.Using the formula , (SL method)
Depreciation per annum = ( Cost - Residual value ) / Useful Life
(15000-3500) /4 = $2875
2. Using SOYD ,
Depreciation = 15000- 3500 = 11500
Sum of years = 4+3+2+1 = 10
Therefore for year1, (4/10) *11500 = $4600
3. Using DDB ,
rate % = 3500/15000 *100 = 23.33
Double rate = 46.66
Therefore , 46.66% off 15000 = 7000
Depreciationfor first year = 7000
4. CCA rate = 30%
Therefore amt to claim at the end of first year = 1/2*30% off 15000
15% off 15000
= 2250
5.
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