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tpx - Google Chrome tpx connect dow shows what is correct and incorrect for the

ID: 2577448 • Letter: T

Question

tpx - Google Chrome tpx connect dow shows what is correct and incorrect for the work you have completed so far al ofthe work you have done sotescorrect you may havepleted emerg 25.00 points In early January 2015, New/lech purcharses computer equpment for 5188 000 b use n for the next four years it estimates the equpments salvage vialue ar $43 000 operating actvties Prepare a table showing deprecation and book valur for each of the four years assuming double dedlining Answer is complete but irely correct. End of Period Book Value 2015 2016 2017 2018 88000 4 000 47 00 23.500 1750176 250 11250 O Waiting for cache. F11 Prtsc Paus Del ome Pg U F9 FIO Scr Lk SysRq "Break Backspace 0

Explanation / Answer

Yes there is some incorrect calculation for year 2017 and 2018;

Following information are given in the question;

Purchase price is $188000

Salvage value is $43000

Useful life is 4 years

Rate of depreciation will be calculated as follow;

1 / 4 = .25 * 2 = 50%

So on the basis of above detail it is clear that accumulated depreciation can be upto maximum ($188000 - $43000) = $145000

So let’s see the depreciation and accumulated depreciation for each year;

Double Declining Balance Method

Depreciation for the period

End of period

Year

Beginning year book balance

Depreciation rate

Annual depreciation

Accumulated depreciation

Year end book value

2015

$188000

50%

$94000

$94000

$94000

2016

$94000

50%

$47000

$141000

$47000

2017

$47000

50%

$4000

$145000

$43000

2018

$43000

50%

Nil

$145000

$43000

Total

$145000

Working Note:

Depreciation for Year 2017 is calculated as follow;

$47000 * 50 / 100 = $23500 but we see that maximum limit for accumulated depreciation is $145000 thus depreciation for year 2017 will be ($145000 - $141000) = $4000

Double Declining Balance Method

Depreciation for the period

End of period

Year

Beginning year book balance

Depreciation rate

Annual depreciation

Accumulated depreciation

Year end book value

2015

$188000

50%

$94000

$94000

$94000

2016

$94000

50%

$47000

$141000

$47000

2017

$47000

50%

$4000

$145000

$43000

2018

$43000

50%

Nil

$145000

$43000

Total

$145000