Calculate depreciation (24 points) A high-speed multiple-bit drill press costing
ID: 2496886 • Letter: C
Question
Calculate depreciation (24 points) A high-speed multiple-bit drill press costing $480,000 has an estimated salvage value of $40,000 and a life of ten years. The drill press's life output is estimated at 110,000 units. The press produced 12,000 units the first year and 18,000 units the second year. What is the annual depreciation for each of the first two full years under the following depreciation methods? Show and label all calculations. Double-declining-balance method: Year one, $______________. Year two, $______________. Units of production (activity) method: Year one, $______________. Year two, $______________. Sum-of-the-years'-digits method: Year one, $______________. Year two, $______________. Straight-line depreciation method: Year one, $______________. Year two, $______________.
Explanation / Answer
1. Double-declining-balance method: Year one, $_88000_. Year two, $_70400.
Depreciation = 2 * SLM depreciation percent * [(book value at beginning - salvage value) - accumulated depreciation]
year 1 =( 2 * 10% )* [ (480000-40000) -0 ] = $ 88000
Year 2 = (2* 10%) * [(480000 - 40000) - 88000] = $70400
2. Units of production (activity) method: Year one, $48000_ Year two, $_72000__.
Depreciation per unit= 480000-40000/110000 = 4 per unit
Depreciation in first year = $4 * 12000units = $48000
Depreciation in second year = $4 * 18000units = $72000
3. Sum-of-the-years'-digits method: Year one, $_80000_. Year two, $_72000__.
4. Straight-line depreciation method: Year one, __$44000___. Year two, __$44000_______.
Asset costing =$480,000
salvage value = $40,000 , life = ten years
Depreciaton as per SLM = asset cost - salvage value / life
= 480000 - 40000 / 10 = $ 44000
Years Digit Depreciation 1 10 80000 2 9 72000 3 8 64000 4 7 56000 5 6 48000 6 5 40000 7 4 32000 8 3 24000 9 2 16000 10 1 8000 55 440000Related Questions
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