On January 2, 2016, the Unit Manufacturing Company purchased manufacturing equip
ID: 2551642 • Letter: O
Question
On January 2, 2016, the Unit Manufacturing Company purchased manufacturing equipment for $83,000. The equipment is expected to have a useful life of six years and a salvage value of $2,000. Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method, the double-declining-balance method, and the sum-of-the-years'-digits method.
On January 2, 2016, the Unit Manufacturing Company purchased manufacturing equipment for $83,000. The equipment is expected to have a useful life of six years and a salvage value of $2,000. Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method, the double-declining-balance method, and the sum-of-the-years'-digits method.
Explanation / Answer
SLM Cost of Machine 83,000.00 Salvage Value 2,000.00 Life in years 6.00 Particulars 2016 2017 2018 Opening Balance 83,000.00 69,500.00 56,000.00 Depreciation(83000-2000)/6 13,500.00 13,500.00 13,500.00 Closing balance 69,500.00 56,000.00 42,500.00 Life 6 Years Double decling balance method rate = 1/6%*2 33.33% Particulars 2016 2017 2,018.00 Opening Balance 83,000.00 55,333.36 36,888.93 Depreciation at 33.33% 27,666.64 18,444.44 12,296.30 Closing balance 55,333.36 36,888.93 24,592.63 Sum of years digits Method Life in years 6.00 Cost of Asset 83,000.00 Salavge Value 2,000.00 Depreciable Value = 81,000.00 sum of the years' digits depreciation calculation is = n(n+1)/2 = 6(6+1)/2 = 6*7/2 = 42/2 = 21 Year Depreciation WN 2,016.00 23,142.86 81000/21*6 2,017.00 19,285.71 81000/21*5 2,018.00 15,428.57 81000/21*4 57,857.14
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