Judds Company purchased a new plant asset on April 1, 2014, at a cost of $1,713,
ID: 2487219 • Letter: J
Question
Judds Company purchased a new plant asset on April 1, 2014, at a cost of $1,713,510. It was estimated to have a service life of 20 years and a salvage value of $144,600. Judds’ accounting period is the calendar year.
a. Compute the depreciation for this asset for 2014 and 2015 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. 45,892.)
Depreciation for 2014:
Depreciation for 2015:
b. Compute the depreciation for this asset for 2014 and 2015 using the double-declining-balance method. (Round answers to 0 decimal places, e.g. 45,892.)
Depreciation for 2014:
Depreciation for 2015:
Explanation / Answer
Sum of years digit method
Depreciation of 2014 is
2014
9 month of year 1
(7471/12)*9
5603.25
Depreciation of 2015 is
2015
3 month of year 1
(7471/12)*3
1867.75
9 month of year 2
(14942/12)*9
11206.5
13074.25
Year
Digit(A)
Depreciation ((A)/210)8(1713510-144600)
2014
1
7471
2015
2
14942
2016
3
22413
2017
4
29884
2018
5
37355
2019
6
44826
2020
7
52297
2021
8
59768
2022
9
67239
2023
10
74710
2024
11
82181
2025
12
89652
2026
13
97123
2027
14
104594
2028
15
112065
2029
16
119536
2030
17
127007
2031
18
134478
2032
19
141949
2033
20
149420
210
1568910
Double declined balance method:-
Straight line depreciation =(1713510-144600)/20 = 48445.5
Straight line depreciation rate = 48445.5/1568910 = 3.09%
Double declined balance rate = 2*3.09= 6.18%
Depreciation of year 1 = 1713510*6.18% =105821
Depreciation of year 2 = (1713510-105821)*6.18% = 99286
Depreciation of 2014 :-
2014
9 month of year 1
(105821/12)*9
79365.75
Depreciation of 2015:-
2015
3 month of year 1
(105821/12)*3
26455.25
9 month of year 2
(99286/12)*9
74464.5
100919.8
2014
9 month of year 1
(7471/12)*9
5603.25
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