Exercise 11-14 Double-aecining-balance method; switcn to straight line ILO11-2,
ID: 2395234 • Letter: E
Question
Exercise 11-14 Double-aecining-balance method; switcn to straight line ILO11-2, 11-6] ing process. The equipment has ar estimated life of eight years and an estimated residual value of $35,500. The expenditures made to acquire the asset were as fo $170,500 3,200 s,500 Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life a then switch to straight line halfway through the equipment's life. Required: 1. Calculate depreciation for each year of the asset's eight-year life. DCulcate depreciation for each year of the assets eight year ation for the Period End Beginning of Period Book DepreciationAnnualAccumulated Rate Depreciation ation Value 2018 2019 2020 2021 2023 2024 2025 TotalExplanation / Answer
Answers
A
Purchase price
$ 1,70,500.00
B
Freight
$ 3,200.00
C
Installation
$ 5,500.00
D=A+B+C
Beginning Period Book Value - Cost capitalized
$ 1,79,200.00
E
Residual Value
$ 35,500.00
F=D – E
Depreciable base
$ 1,43,700.00
G
Useful Life
8
H = F/G
Annual Depreciation as per SLM
$ 17,962.50
I = H/F
SLM Rate
12.50%
J = I x 2
DDB rate
25%
Year
Beginning of Period Book Value
Depreciation Rate
Annual Depreciation
Accumulated Depreciation
Book Value
2018
$ 1,79,200.00
25%
$ 44,800.00
$ 44,800.00
$ 1,34,400.00
2019
$ 1,34,400.00
25%
$ 33,600.00
$ 78,400.00
$ 1,00,800.00
2020
$ 1,00,800.00
25%
$ 25,200.00
$ 1,03,600.00
$ 75,600.00
2021
$ 75,600.00
25%
$ 18,900.00
$ 1,22,500.00
$ 56,700.00
2022
$ 56,700.00
$ 5,300.00
$ 1,27,800.00
$ 51,400.00
2023
$ 51,400.00
$ 5,300.00
$ 1,33,100.00
$ 46,100.00
2024
$ 46,100.00
$ 5,300.00
$ 1,38,400.00
$ 40,800.00
2025
$ 40,800.00
$ 5,300.00
$ 1,43,700.00
$ 35,500.00
Total
$ 1,43,700.00
A
Book Value at the end of 4 years [2021]
$ 56,700.00
B
Residual Value
$ 35,500.00
C = A - B
Depreciable base(remaining)
$ 21,200.00
D = 8 years - 4 years
Remaining Life
4 years
E = C/D
SLM Depreciation
$ 5,300.00 [21200/4]
A
Purchase price
$ 1,70,500.00
B
Freight
$ 3,200.00
C
Installation
$ 5,500.00
D=A+B+C
Beginning Period Book Value - Cost capitalized
$ 1,79,200.00
E
Residual Value
$ 35,500.00
F=D – E
Depreciable base
$ 1,43,700.00
G
Useful Life
8
H = F/G
Annual Depreciation as per SLM
$ 17,962.50
I = H/F
SLM Rate
12.50%
J = I x 2
DDB rate
25%
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