Please show me how this is to be calculated. I\'m doing my homework now, and if

Question

Please show me how this is to be calculated. I'm doing my homework now, and if it can be resolved in a timely manner I would greatly appreciate it. Thank you in advance.

On March 1, Jarvis Realty spent $16,400 for a new company car with an estimated life of 4 years and an estimated scrap value of $3,500. Jarvis Realty elected to use the straight-line method for depreciation. On the same date, Carter Realty bought an identical car at the same price and also estimated the car's life and scrap value to be 4 years and $3,500, respectively. Carter Realty, however, chose the sum-of-the-years-digits method for depreciation.

a. At the end of the first year (10 months of use) and second year, how much depreciation did each company calculate? Do not round interim calculations. Round final answers to the nearest dollar.

b. At the end of the second year, which company had more recorded accumulated depreciation, and what was the difference in the amounts?

by $

c. At the end of the fourth year, Carter Realty will have recorded more accumulated depreciation than Jarvis Realty.

Explanation / Answer

Jarvis Realty - Straight line method Depriciation Cost 16400 Salvage Value 3500 estmated life 4 years Depriciation for the year = ( Cost - Salvage Value) / estimated life                                                    = ( 16400 - 3500) / 4                                                    = 12900/4                                                    = 3225 Year 1 Year 2 for 10 months full year 3225/12* 10 Jarvis = 2687.50 3225 Carter Cost 16400 Salvage Value 3500 estmated life 4 years Sum of the years' digit method = Depriciable Base * Remaining useful life / Sum of the years' digit Depriciable Base = Cost - Salvage value        = 16400 - 3500        = 12900 Sum of the years digit = n(n+1)/2 = 4( 4+1 )/2 = 10 Year Depriciable Base Depriciation factor Depriciation expense full year for 10 months 1 12900 4/10 4/10*12900 = 5160 5160/12*10 = 4300 2 12900 3/10 3/10*12900 = 3870 3870/12*10 = 3225 Year 1 4300 Year 2 = (5160 -4300) + 3225 = 860 + 3225 = 4085 a) Year 1 Year 2 Accumulated Depriciation Jarvis 2687.5 3225 5912.5 Carter 4300 4085 8385 b) At the end of the 2nd year company carter recorded more accumulated depriciation The difference between the two is 8385 - 5912.5 = 2472.50 c) At the end of the fourth year both companies would have recorded the same accumulated depriciation by the end of 4th year as the estimated life is 4 years , and by the end of the 4th year the asset will be fully depriciated

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