1. Prepare depreciation schedules using Straight -Line. Activity Based, and Doub

Question

1. Prepare depreciation schedules using Straight -Line. Activity Based, and Double-Declining Balance Depreciation. Finance Depreciation Schedules-Excel FILE HOME INSERTPAGE LAYOUT FORMULAS DATA REEW VIEW Sign In 1 HAAlignment Number Conditional Format as Cell Cells Editing Paste B r u. |· Formatting Table Styles Font A1 Sullivan Ranch Corporation has purchased a new tractor. The following 1 Sullivan Ranch Corporatiord has purchased a new tractor. The following information is given: 3 Cost $ 150,000 Estimated Resaidua:1000 Estimated Residual: 5 Estimated Life in years 6 Estimated Life in hours: 1200 Actual Hours: Year 1 9 ear 2 cyear a 360 270 350 220 Prepare the following Straight Line depreciation schedule by using the excel SLN FUNCTION (fx) to calculate the 1a Depreciation Expense for Years 1-4 in the Depreciation Expense column. Enter formulas or absolute cell references for the remaining cells eoux value

Explanation / Answer

Answer:-

1)-Declining balance depreciation is calculated using the following formula:

Depreciation = Depreciation Rate * Book Value of Asset

Depreciation rate is given by the following formula:

Depreciation Rate = Accelerator *Straight Line Rate

Straight-line Depreciation Rate = 1/4 = 0.25 = 25%
Declining Balance Rate = 2*25% = 50%

2)- Straight line Method = Cost of asset- Salvage value of asset/No. of useful life (years)

                                        =$150000-$10000/4 = $35000

3)- Units of Production=No.of hours/Life in no.of hours*(Cost – Salvage value)

         Depreciation:-

Year 1 =360/1200*($150000-$10000) = .30*$140000 = $42000

Year 2=270/1200*$140000 = $31500

Year 3=350/1200*$140000=$40833

Year 4=220/1200*140000 = $25667

Depreciation = Depreciation Rate * Book Value of Asset

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