1. The price of a desktop computer purchased by Alpha Electronics was $5,034. It

Question

1. The price of a desktop computer purchased by Alpha Electronics was $5,034. It cost $189 for delivery and $256 for installation. The salvage value at the end of a 5-year life is $424. Using the sum-of-the-years' digits depreciation, calculate the annual depreciation for year 4.

a. $596

b. $337

c. $582

d. $674

2.A computer system purchased by Jones Company cost $45,900. Using the MACRS method, calculate the accumulated depreciation at the end of year 3. (Round all dollar amounts to the nearest cent)

$30,339.20

$33,529.81

$36,700.00

$32,680.80

$30,339.20

$33,529.81

$36,700.00

$32,680.80

Explanation / Answer

Total Cost of the computer = 5034+189+256=5479

Salvage value = 484

Net cost to be depreciated = 5479-484 = 4995

Life time = 5 years

Sum of digits of years = 1+2+3+4+5 = 15

Hence first year 5/15, ii year 4/15, iii year 3/15, and iv year 2/15

So depreciation for iv year = 2/15 (4995) = 666

Hence nearest answer option 4 is right

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Computer cost = 45900

At the end of year 3, under Macrs depreciation method

Depreciation = 200% of Declared balance

(Since for computers 200% is used)

I year 20

II Year 32

III year 19.2

Hence accumulated depn = (20+32+19.2) % of 45900 = 32680.80

So option d

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