On April 29, 2013, Quality Appliances purchased equipment for $260,000. The esti

Question

On April 29, 2013, Quality Appliances purchased equipment for $260,000. The estimated service life of the equipment is six years and the estimated residual value is $20,000. Quality's fiscal year ends on December 31.

Calculate depreciation for 2013 and 2014 using each of the three methods listed. Quality calculates partial year depreciation based on the number of months the asset is in service. (Do not round intermediate calculations.)

Using the sum of the years digits, what is depreciation for 2014

Explanation / Answer

SLM Cost of Machine              260,000.00 Salvage Value                20,000.00 Life in years                           6.00 Depreciation per Year = (260,000 - 20,000)/6                40,000.00 Depreciation for 2013 = 40,000*8/12                26,666.67 Depreciation for 2014                40,000.00 Life   6 Years Double decling balance method rate = 16.67% 33.33% Particulars 2013 2014 Opening Balance              260,000.00        202,228.00 Depreciation@33.33%                57,772.00          67,402.59 Closing balance              202,228.00        134,825.41 Depreciation for 2013 = 260000*8/12*33.33% Sum Of digits Cost of Machine              260,000.00 Salvage Value                20,000.00 Time in Years                           6.00 Depreciation for First Year = (260,000-20,000)/21*6                68,571.43 Depreciation for Second Year = (260,000-20,000)/21*5                57,142.86 Depreciation for 2013 = 68571.43*8/12                45,714.29 Depreciation for 2014 = 57142.86*8/12 + (68571.43-45714.29)                60,952.38

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