Nickle Company purchased an asset for $17,000 on January 2, 2013. The asset has

Question

Nickle Company purchased an asset for $17,000 on January 2, 2013. The asset has an expected residual value of $1,000. The depreciation expense for 2013 and 2014 is shown next for three alternative depreciation methods:

Required:

Method A: - Select your answer - Sum-of-the-years'-digitsStraight-line150%-declining balanceItem 1

Method B: - Select your answer - Sum-of-the-years'-digitsStraight-line150%-declining balanceItem 2

Method C: - Select your answer - Sum-of-the-years'-digitsStraight-line150%-declining balanceItem 3

Compute the depreciation expense for 2016 under each method. If required, round to the nearest dollar.

Year Method A Method B Method C 2013 $ 4,000 $ 6,400 $6,375 2014 4,000 4,800 3,984 Nickle Company purchased an asset for $17,000 on January 2, 2013. The asset has an expected residual value of $1,000. The depreciation expense for 2013 and 2014 is shown next for three alternative depreciation methods:

Explanation / Answer

Useful Life is 4 years. Hence, straight line depreciation rate is 1/4 or 25%

Under 150% declining balance method it will be 25%*1.5 = 37.5%.

Depreciation for 2013
= $17000*37.5% = $6375

Depreciation for 2014
= $(17000-6375)*37.5% = $3984

Depreciation for 2015
= $(17000

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