A company acquired the following assets: a. Conveyor, 10-year useful life, $31,0

Question

A company acquired the following assets: a. Conveyor, 10-year useful life, $31,000 cost, straight-line method, $5,500 expected residual value b. Truck, 3-year useful life, $24,000 cost, DDB method, $1,600 expected residual value. Requirement 1. Compute the first 3 years of depreciation for each asset. Start by selecting the formula you will need to compute annual depreciation under each of the methods. Annual straight-line depreciation Annual DDB depreciation Now, compute depreciation for each year under the straight-line method and then the DDB method. (Do not round interim calculations. Round your final answer to the nearest whole dollar.) Annual Straight-Line Depreciation Annual DDB Depreciation Year 1 Year 2 Year 3

Explanation / Answer

(Original cost-salvage value)/useful life = Annual straight line depreciation

Beginning book value of the year*Double decline dep rate = Annual DDB Depreciation

Annual Straight line depreciation Annual DDB Depreciation Year 1 (31000-5500/10) = 2550 24000*2/3 = 16000 Year 2 2550 8000*2/3 = 5333 Year 3 2550 1067

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