Exercise 11-1 Marigold Company purchases equipment on January 1, Year 1, at a co

Question

Exercise 11-1 Marigold Company purchases equipment on January 1, Year 1, at a cost of $572,180. The asset is expected to have a service life of 12 years and a salvage value of $48,800 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 Yar 2 $ Depreciation for Year 3 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 3s s

Explanation / Answer

Straight line dep :

Depreciation per year = (572180-48800/12) = 43615

Depreciation for year 1 = 43615

Depreciation for year 2 = 43615

Depreciation for year 3 = 43615

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

Depreciation for year 1 = (572180-48800)*12/78 = 80520

Depreciation for year 2 = (572180-48800)*11/78 = 73810

Depreciation for year 3 = (572180-48800)*10/78 = 67100

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

Double decline balance rate = 8.33%*2 = 16.67%

Depreciation for year 1 = 572180*16.67% = 95382

Depreciation for year 2 = (572180-95382)*16.67% = 79482

Depreciation for year 3 = (572180-95382-79482)*16.67% = 66233

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