Please Solve the following problem A Hospital just acquired new equipment. The e

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Please Solve the following problem A Hospital just acquired new equipment. The equipment cost $4,250,000 and the organization spent $135,000 on upgrading the physical plant where the equipment will be located. The equipment is expected to have a 10-year useful life and a salvage value of 10% ($425,000), Calculate the first five years of depreciation using straight line, double declining balance, and sum-of-the-years digits. Please show solutions to the following below. Asset Cost: Salvage Value: Asset Life: Straight-line Depreciation Each Year #DIV/0! Asset Cost: $0 Asset Cost: $0 Salvage Value: $0 Salvage Value: $0 Asset Life: 0 Asset Life: 0 Depreciation Year Depreciation Year Sum of the Years Digits Depreciation #NUM! Double Declining Balance Depreciation #NUM! Straight Line Double Declining Balance Sum-of-the years Digits Annual Accumulated Annual Accumulated Annual Accumulated Year Depreciation Depreciation Depreciation Depreciation Depreciation Depreciation                       1 $0 $0 $0                       2 $0 $0 $0                       3 $0 $0 $0                       4 $0 $0 $0                       5 $0 $0 $0 Please Solve the following problem A Hospital just acquired new equipment. The equipment cost $4,250,000 and the organization spent $135,000 on upgrading the physical plant where the equipment will be located. The equipment is expected to have a 10-year useful life and a salvage value of 10% ($425,000), Calculate the first five years of depreciation using straight line, double declining balance, and sum-of-the-years digits. Please show solutions to the following below. Asset Cost: Salvage Value: Asset Life: Straight-line Depreciation Each Year #DIV/0! Asset Cost: $0 Asset Cost: $0 Salvage Value: $0 Salvage Value: $0 Asset Life: 0 Asset Life: 0 Depreciation Year Depreciation Year Sum of the Years Digits Depreciation #NUM! Double Declining Balance Depreciation #NUM! Straight Line Double Declining Balance Sum-of-the years Digits Annual Accumulated Annual Accumulated Annual Accumulated Year Depreciation Depreciation Depreciation Depreciation Depreciation Depreciation                       1 $0 $0 $0                       2 $0 $0 $0                       3 $0 $0 $0                       4 $0 $0 $0                       5 $0 $0 $0

Explanation / Answer

The Depreciation formulas for three methods are:

Straight line method: (Cost of the asset - Salvage Value) / Useful life of asset

Double depreciation method: Straight line depreciation x 2

Sum of years digits method: (Cost of asset - Salvage value) x Remaining useful life/Sum of useful years.

Cost of the asset: Cost of asset includes purchase price including the cost of installation.

So the cost of asset = $4250000 + $135000 = $4385000

Straight line method: (4385000 - 425000) / 10 = $396000

Double decline depreciation = Straight line method depreciation x 2 = $396000x2 = $792000

PS: Please use "Thums Up" if you are contented with my solution and presentation.

Year Straight line method depreciation Accumulated depreciation Double depreciation method Accumulated depreciation Sum of years digits method Accumulated depreciation 1 $396000 $396000 $792000 $792000 3960000x10/55=$720000 $720000 2 $396000 $792000 $792000 $1584000 $3960000x9/55=$648000 $1368000 3 $396000 $1188000 $792000 $2376000 $3960000x8/55=$576000 $1944000 4 $396000 $1584000 $792000 $3168000 $3960000x7/55=$504000 $2448000 5 $396000 $1980000 $792000 $3960000 $3960000x6/55=$432000 $2880000

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