Problem #4-Depreciation methods (12pts! On September 6, 2014, East River Tug Co.
ID: 2573984 • Letter: P
Question
Problem #4-Depreciation methods (12pts! On September 6, 2014, East River Tug Co. purchased a new tugboat for $400,000. The estimated life of the boat was 20 years, with an estimated residual value of $40,000. Compute the depreciation on this tuaboat in 2014 and 2015 using the following ply the half-year convention. (If necessary, round to the nearest dollar.) 2015 310000 2014 S $ Computations (show your work in details below (a) Straight-line (b) 200%declining-balance (c) 150%-declining-balance $ $ $ -3boooox )0%-3b.oo. It year. I8honExplanation / Answer
Answer:
2014
2015
Straight line
9000
18000
200%-Declining Balance method
20,000
38,000
150%-Declining Balance method
15,000
28875
Working notes for the above answer
1
Straight line depreciation
Depreciation
=(cost-Residual value) / life of the assets
=(400,000-40,000) /20 year
=360,000 /20 year
=$18,000 deprecation Per year
2
200%-Declining Balance method
In 200%-Declining Balance method we take double rate then in straight line
rate as per Straight line depreciation
=(100/20 years)
=5% rate each year
So in 200%-Declining Balance method
we take 200% of 5%
=5%*200%
=10%
150%-Declining Balance method
In 150%-Declining Balance method we take double rate then in straight line
rate as per Straight line depreciation
=(100/20 years)
=5% rate each year
So in 150%-Declining Balance method
we take 150% of 5%
=5%*150%
=7.5%
2014
2015
Straight line
2014=18000*1/2
9000
2015=18000
18000
200%-Declining Balance method
2014=(400,000*10%*1/2)
20,000
2015=((400,000-20,000)*10%)
38,000
150%-Declining Balance method
2014=(400,000*7.5%*1/2)
15,000
2015=((400,000-15,000)*7.5%)
28875
2014
2015
Straight line
9000
18000
200%-Declining Balance method
20,000
38,000
150%-Declining Balance method
15,000
28875
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.