Us the information below to answer questions 1 and 2. Machinery Combine A Combin

Question

Us the information below to answer questions 1 and 2. Machinery Combine A Combine B Tractor A Cost (S) 80,000 75,000 45,000 50,000 Salvage value (S) 10,000 10,000 Useful life 10 10 Tractor B (1) Assume you own the machinery above. Calculate annual depreciation using the straight-line method. Year Combine A Combine B Tractor A Tractor B Book Value Depreciation Book Value Depreciation Book Value Depreciation Book Value Depreciation , 0,000 66,000 7,00062,000eroo s2.ooo | ,0.0 4S1000 S Do C8, Doo 2921 6.25 6 128,1 6 45, o00, 42 60 250 Lso

Explanation / Answer

Given

Machinery Cost, Salvage Value & Useful Life

Combine A - $80,000 with salvage value of $10,000 for 10yrs

Combine B - $75,000 with salvage value of $10,000 for 10yrs

Tractor A - $45,000 with no salvage value for 8yrs

Tractor B - $50,000 with no salvage value for 8yrs

Now,

Straight Line Depreciation Rate = Depreciation Expense / Depreciable Base

Double-Declining Depreciation Method = Straight-Line Depreciation Rate x 2

1)

2)

Now,

Both Machinery Combine A & Combine B's net book value in 6th year becomes $10,000 which is equals to their salvage value hence $0 deducted from the net book value thereafter.

As salvage value of Machinery Tractor A & Tractor B is $0 hence only Straight-Line Method is used.

Straight-Line Depreciation Method Year Combine A Combine B Tractor A Tractor B Book Value Depreciation Book Value Depreciation Book Value Depreciation Book Value Depreciation 1 $80,000 $7,000 $75,000 $6,500 $45,000 $5,625 $50,000 $6,250 2 $73,000 $7,000 $68,500 $6,500 $39,375 $5,625 $43,750 $6,250 3 $66,000 $7,000 $62,000 $6,500 $33,750 $5,625 $37,500 $6,250 4 $59,000 $7,000 $55,500 $6,500 $28,125 $5,625 $31,250 $6,250 5 $52,000 $7,000 $49,000 $6,500 $22,500 $5,625 $25,000 $6,250 6 $45,000 $7,000 $42,500 $6,500 $16,875 $5,625 $18,750 $6,250 7 $38,000 $7,000 $36,000 $6,500 $11,250 $5,625 $12,500 $6,250 8 $31,000 $7,000 $29,500 $6,500 $5,625 $5,625 $6,250 $6,250 9 $24,000 $7,000 $23,000 $6,500 10 $17,000 $7,000 $16,500 $6,500

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.