Nash Company purchases equipment on January 1, Year 1, at a cost of $497,140. Th
ID: 2584787 • Letter: N
Question
Nash Company purchases equipment on January 1, Year 1, at a cost of $497,140. The asset is expected to have a service life of 12 years and a salvage value of $42,400.
Nash Company purchases equipment on January 1, Year 1, at a cost of $497,140. The asset is expected to have a service life of 12 years and a salvage value of $42,400.
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 $ Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (Round depreciation rate to 2 decimal places, e.g. 15.84%. Round answers to 0 decimal places, e.g. 45,892.)
Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $
Explanation / Answer
Depreciation per year = (Cost – Salvage Value) / Service Life
= ($497,140 - $42,400) / 12
Depreciation per year = $37,895
Rate of Dep. = 1/useful life
= 1/12
Rate of Dep. = 8.33333%
In Straight Line, depreciation is same every year.
Depreciation = Fraction * Cost of Machine
Year
Cost
Remaining Life of Machine
Fraction
Depreciation
1
$497,140
12
12/78
76483
2
$497,140
11
11/78
70,109
3
$497,140
10
10/78
63,736
4
$497,140
9
9/78
5
$497,140
8
8/78
6
$497,140
7
7/78
7
$497,140
6
6/78
8
$497,140
5
5/78
9
$497,140
4
4/78
10
$497,140
3
3/78
11
$497,140
2
2/78
12
$497,140
1
1/78
Total
78
I calculated for first 3 year as the question required that.
Rate of Dep. = 2*8.333333%
= 16.66666%
Year
Book Value
Depreciation
1
$497,140
82,857
2
$414,283
69,047
3
$344,876
57,479
Year
Cost
Remaining Life of Machine
Fraction
Depreciation
1
$497,140
12
12/78
76483
2
$497,140
11
11/78
70,109
3
$497,140
10
10/78
63,736
4
$497,140
9
9/78
5
$497,140
8
8/78
6
$497,140
7
7/78
7
$497,140
6
6/78
8
$497,140
5
5/78
9
$497,140
4
4/78
10
$497,140
3
3/78
11
$497,140
2
2/78
12
$497,140
1
1/78
Total
78
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