Exercise 11-1 Sarasota Company purchases equipment on January 1, Year 1, at a co

Question

Exercise 11-1 Sarasota Company purchases equipment on January 1, Year 1, at a cost of $539,350. The asset is expected to have a service life of 12 years and a salvage value of $46,000 Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. (Round answers to O decimal places, e.g. 5,125.) Depreciation for Year 1 s Depreciation for Year 2 Depreciation for Year 3 s LINK TO TEXT Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method Depreciation for Year 1 Depreciation for Year 2 s Depreciation for Year 3 s LINK TO TEXT

Explanation / Answer

1) Straight line (539350-46000)/12 41113 Depreciation for year 1 41113 Depreciation for year 2 41113 Depreciation for year 3 41113 2) Sum of the years digit method n*(n+1)/2 (12*13)/2 78 Depreciation for year 1 (539350-46000)*12/78 75900 Depreciation for year 2 (539350-46000)*11/78 69575 Depreciation for year 3 (539350-46000)*10/78 63250 3) double declining method rate = 1/12*2 16.67% Depreciation for year 1 (539350*16.67%)= 89910 Depreciation for year 2 (539350-89910)*16.67%= 74922 Depreciation for year 3 (539350-89910-74922)*16.67%= 62432

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