Larkspur Company purchases equipment on January 1, Year 1, at a cost of $562,800
ID: 2576045 • Letter: L
Question
Larkspur Company purchases equipment on January 1, Year 1, at a cost of $562,800. The asset is expected to have a service life of 12 years and a salvage value of $48,000.
Larkspur Company purchases equipment on January 1, Year 1, at a cost of $562,800. The asset is expected to have a service life of 12 years and a salvage value of $48,000.
Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. (Round answers to 0 decimal places, e.g. 5,125.)Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $ 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 $ Depreciation for Year 3 $
Explanation / Answer
Answer:
1
Straight line depreciation Method
cost = $562,800.
life = 12 years
salvage value = $48,000.
Straight line depreciation
=(Cost- salvage value) / life years
=562,800-48000 /12 year
=$42900 depreciation each year
Depreciation
Year-1
42900
Year-2
42900
Year-3
42900
________________________________________________________-
2
the sum-of-the-years'-digits method.
First of all we have to calculate the base for depreciation
Base
=562,800-48000
=514800
Now we will calculate the sum of the years as under
=12+11+10+9+8+7+6+5+4+3+2+1
=78
Depreciation calculation
Base
Calculation
Depreciation
1
514800
514800*12/78
79200
2
514800
514800*11/78
72600
3
514800
514800*10/78
66000
Year
Depreciation
Year-1
79200
Year-2
72600
Year-3
66000
Depreciation
Year-1
42900
Year-2
42900
Year-3
42900
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.