Exercise 11-3 (Part Level Submission) Blossom Company purchased a new plant asse

Question

Exercise 11-3 (Part Level Submission)

Blossom Company purchased a new plant asset on April 1, 2017, at a cost of $789,210. It was estimated to have a service life of 20 years and a salvage value of $66,600. Blossom’s accounting period is the calendar year.

(a)

Exercise 11-3 (Part Level Submission)

Blossom Company purchased a new plant asset on April 1, 2017, at a cost of $789,210. It was estimated to have a service life of 20 years and a salvage value of $66,600. Blossom’s accounting period is the calendar year.

Explanation / Answer

Depreciable cost = 789210-66600= 722610 Sum-of-the-years'-digits = 20*(20+1) = 420 a Depreciation for 2017 =722610/420*20/12*9= 25808 b Depreciation for 2018 =(722610/420*20/12*3)+(722610/420*19/12*9)= 33120

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