Depreciation Methods and Calculations: Analyzing Straight-Line, Double-Declining Balance, and Sum-of-the-Years' Digits Approaches

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Depreciation Methods and Calculations: Analyzing Straight - Line, Double - Declining Balance, and Sum - of - the - Years' Digits Approaches E11 - 5 (page 599) - Depreciation methods; solving for unknowns ● LO2 For each of the following depreciable assets, determine t he missing amount (?). Abbreviations for depreciation methods are SL for straight line, SYD for sum - of - the - years’ digits, and DDB for double - declining balance. Exercise 11 - 5 Asset A: Straight - line rate is 20% (1 ÷ 5 years) x 2 = 40% DDB rate $24,000 = $60,000 = Book value at the beginning of year 2 .40 Cost - (Cost x 40%) = $60,000 .60Cost = $60,000 Cost = $100,000 Asset B: Sum - of - the - years’ digits is 36 {[8 (8 + 1)] ÷ 2} ($40,000 - residual) x 7/36 = $7,000 $280,000 – 7residual -------------------------- = $7,000 36 $280,000 - 7residual = $252,000 7residual = $28,000 Residual = $4,000 Asset C: $65,000 - 5,000 = $6,000 Life Life = 10 years
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