On January 1, 2016, the Excel Delivery Company purchased a delivery van for $33,
ID: 2466941 • Letter: O
Question
On January 1, 2016, the Excel Delivery Company purchased a delivery van for $33,000. At end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Calculate annual depreciation for the five-year lie of the van using each of the following methods. 1. Straight line ____________ per year 2. Sum of the years digits. Year Depreciation 2016 _________ 2017 _________ 2018 _________ 2019 _________ 2020 _________ Total _________ 3. Double-declining balance. Year Depreciation 2016 _________ 2017 _________ 2018 _________ 2019 _________ 2020 _________ Total _________ 4. Double-declining balance. Year Depreciation 2016 _________ 2017 _________ 2018 _________ 2019 _________ 2020 _________ Total _________
Explanation / Answer
SLM Cost of Machine 33,000.00 Salvage Value 3,000.00 Life in years 5.00 Particulars Each year Depreciation each year (33,000 - 3,000)/5 6,000.00 Sum of the years digits. sum of the years' digits depreciation calculation is = n(n+1)/2 = 5(5+1)/2 = 5*6/2 = 30/2 = 15 Year Depreciation WN 2016 10,000.00 30,000/15 * 5 2017 8,000.00 30,000/15 * 4 2018 6,000.00 30,000/15 * 3 2019 4,000.00 30,000/15 * 2 2020 2,000.00 30,000/15 * 1 30,000.00 Double-declining balance Life 5 Years Double decling balance method rate = 20%*2 40% Particulars 2016 2017 2018 2019 2020 Opening Balance 33,000.00 19,800.00 11,880.00 7,128.00 4,276.80 Depreciation@40% 13,200.00 7,920.00 4,752.00 2,851.20 1,276.80 Closing balance 19,800.00 11,880.00 7,128.00 4,276.80 3,000.00
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