Respuesta :
Answer:
(i) $3,600
(ii) $6,000
(iii) $6,000
(iv) $4,800
Explanation:
Item A:
Depreciation per annum = (Cost - Residual Value) ÷ Useful life
= (40,000 - 4,000) ÷ 5
= 36,000 ÷ 5
= $7,200
Since the asset was purchased on July 1, year 3, it was in use for 6 months.
Depreciation for year 3
= Depreciation per annum × 6/12
= $7200 × 6/12
= $3,600
Item B:
Depreciation per annum = (Cost - Residual Value) / Useful life
= (50,000 - 5,000) ÷ 5
= 45,000 ÷ 5
= $9,000
Since it was sold on August 31, year 3, it was in use in year 3 for 8 months.
Depreciation for year 3 :
= Depreciation per annum × 8/12
= 9,000 × 8/12
= $6,000
Item C:
Depreciation under SL = (Cost - Residual Value) ÷ Useful life
= (60,000 - 2,000) × 5
= 58,000 × 5
= $11,600
Depreciation rate under SL = Depreciation ÷ Cost
= 11600 ÷ 58000
= 20%
Depreciation rate under DDB method = 20 × 2
= 40%
Since it was purchased on Oct 1 year 3, it was in use for 3 months.
Depreciation for year 3:
= Cost × Rate × 3/12
= 60,000 × 40% × 3/12
= $6,000
Item D:
Depreciation under SL = (Cost - Residual Value) ÷ Useful life
= (80,000 - 10,000) ÷ 5
= 70,000 ÷ 5
= $14,000
Depreciation rate under SL = Depreciation ÷ Cost
= 14,000 ÷ 70,000
= 20%
Depreciation rate under DDB method = 20 × 2
= 40%
Depreciation for year 2 = $80,000 × 40%
= $32,000
Net Book Value at the end of year 2 = 80,000 - 32,000
= $48,000
Since it was sold on April 1 year 3, it was in use in Year 3 for 3 months.
Depreciation for year 3 :
= Book Value × Rate × 3/12
= 48000 × 40% × 3/12
= $4,800
Answer: A. Depreciation expense Year 3, (SL)= 3600
B. Depreciation expense Year 3, Aug 31 (SL)= 6000
C. Depreciation Expense Year 3, (DDB)= 6000
D. Depreciation Expense Year 3 April 1 (DDB)= 4800
Explanation:
The straight line method of depreciation spreads depreciation over the life of an asset equally each year. In other words, yearly depreciation is fixed.
It is calculated as: SL; Depreciation expense= (Cost-Residual value)/ (lifetime of asset)
A. Depreciation expense= (40000-4000)/5
Depreciation expense= 7200 (yearly depreciation)
7200 is yearly depreciation value;
Depreciation expense in year 3= 7200(6/12), where 6 is the number of months from July 1, year 3 to December 31, year 3.
Depreciation expense in year 3= 3600
B. Depreciation expense= (50000-5000)/5
Depreciation expense= 9000 (yearly depreciation)
9000 is yearly depreciation value;
Depreciation expense in year 3= 9000(8/12), where 8 is the number of months from January 1, year 3 to August 31, year 3.
Depreciation expense in year 3= 6000
The double declining balance method of depreciation works in such a way that higher values of depreciation are deducted in the early years of the asset. It ignores the residual values. It is calculated as:
DDB expense= (DDB%)(Book value)
Where: DDB%= (100%/Lifetime)2
Book value= Cost- Accumulated depreciation
C. DDB%= (100%/5)2
DDB%= 40%
Thus, DDB expense = 40%(60000)
DDB expense = 24000
24000 is one year depreciation, so we have to convert this into 3 months (i.e October1, year3 to December 31, year 3) by multiplying by (3/12)
DDB depreciation expense = 24000(3/12) =6000
D. For explanation of this please find attached file below.
