Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $858,

Question

Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $858,270. The asset is expected to have a service life of 12 years and a salvage value of $73,200.

a. Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. (Round answer to 0 decimal places, e.g. $45,892.)

b. Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. $45,892.)

c. Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (Round depreciation rate to 2 decimal places, e.g. 15.84%. Round answers to 0 decimal places, e.g. 45,892.)

Explanation / Answer

a.Depreciation Schedule

Cost: $858,270.00, Salvage: $73,200.00, Life: 12 years
Convention: Full-Month, First Year: 12 months

b.

c.

Depreciation Schedule Year
Book Value
Year Start Depreciation
Expense Accumulated
Depreciation Book Value
Year End 1 $858,270 $65,422.50 $65,423 $792,848 2 $792,848 $65,422.50 $130,845 $727,425 3 $727,425 $65,422.50 $196,268 $662,003

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