uestion #3 Purchase price Salvage/residual value Economic life $4,117,71.5 $267,

Question

uestion #3 Purchase price Salvage/residual value Economic life $4,117,71.5 $267,715 years Year 1 output Year 2 output Year 3 output Year 4 output Year 5 output Year 6 output Year 7 output 115,000 units 106,000 units 108,000 units 106,000 units 116,000 units 105,000 units 114,000 units Complete the depreciation tables which show the beginning book value, depreciation expense and the ending book value using: ° Straight-line depreciation Units-of-output depreciation * Double-declining-balance depreciation

Explanation / Answer

1. Straight-line depreciation

2) Units-of -output depreciation

3) Double declining balance depreciation

Declining balance rate = 2/7= 28.57%

Purchase price $      4,117,715 Less: Salvage value $         267,715 Balance (a) $      3,850,000 Economic life years (b) 7 Depreciation p.a c = a/b $         550,000

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