Exercise 11-1 Grouper Company purchases equipment on January 1, Year 1, at a cos

Question

Exercise 11-1 Grouper Company purchases equipment on January 1, Year 1, at a cost of $501,830. The asset is expected to have a service life of 12 years and a salvage value of $42,800 Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. (Round answers to O decimal places, e.g. 5,125.) Depreciation for Year 1 ? Depreciation for Year 2 s Depreciation for Year 3 s LINK TO TEXT Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. Depreciation for Year 1 Depreciation for Year 2 Depreciation for Year 3 s LINK TO TEXT

Explanation / Answer

Straight line dep :

Depreciable base = (501830-42800) = 459030

Depreciation for year 1 = 459030/12 = 38253

Depreciation for year 2= 38253

Depreciation for year 3 = 38253

Sum of year digit = 12+11+10+9+8+7+6+5+4+3+2+1 = 78

Depreciation for year 1 = 459030*12/78 = 70620

Depreciation for year 2 = 459030*11/78 = 64735

Depreciation for year 3 = 459030*10/78 = 58850

Double decline :
Straight line = 100/12 =8.33%

Double decline rate = 8.33*2 = 16.67%

Depreciation for year 1 = 501830*16.67% = 83655

Depreciation for year 2 = (501830-83655) *16.67% = 69710

Depreciation for year 3 = (501830-83655-69710)*16.67% = 58089

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