For each of the following depreciable assets, determine the missing amount (?).

Question

For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight line, SYD for sum-of-the-years’ digits, and DDB for double-declining balance. (Do not round intermediate calculations. Round your answers to the nearest whole number.)

For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight line, SYD for sum-of-the-years’ digits, and DDB for double-declining balance. (Do not round intermediate calculations. Round your answers to the nearest whole number.)

Explanation / Answer

Asset A, Cost = $187500

Asset B, Residual Value = $7,000

Asset C, Life = 8 years

Asset D, Method = Straight Line Method

Asset E, Depreciation Year 2 = $ 33,211

Asset A

SL rate = (1 ÷ 5 years) x 100 = 20%

DDB rate = SL rate x 2 = 40%

Book value @ the beginning of year 2 = $45,000 ÷ 0.40 = $112500

Cost – (Cost x 0.40) = $112500

Cost (1 – 0.40) = $112500

Cost = $112500÷ 0.60

Cost = $187500

Asset B

SYD = [ 8 ( 8+1 ) ] ÷ 2 = 36

($25,000 – residual) x 7/36 = $3500

residual = $25000 – ($3500 x 36/7)

Residual Value = $7,000

Asset C

$101000 - 5,000= $ 96,000

Life = $96,000 ÷ 12000

Life = 8 years

Asset D

Straight Line Method

Method Depreciable base = $266,000 – 28,000 = $2,38,000

$238000 ÷ 10 years = $ 23800 per year

Asset E

SL rate = (1 ÷ 8 years) x 100 = 12.5%

Rate = 12.5% x 1.5 = 18.75%

Year 1:$218,000 x 0.1875 = $ 40875

Year 2:( $218,000 – 40875 x 0.1875 = $ 33,211

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