eBook Calculator Print item Nickle Company purchased three i

eBook Calculator Print item Nickle Company purchased three identical assets for $17.000 on January 2, 2016. Each asset has an expected residual value of 11,000. The depreciation expense for 2016 and 2017 1is shown below for three assets Year Asset A Asset B Asset C 4,000 6400$5,375 2016 2017 Required: 1. which depreciation method is the company using in each example 4,B00 984 Asset A Straight-line Asset B: Asset C: ) Sum-of the year-agts 2. Compute the depreclation expense for 2018 under each method. If required, round to the nearest ollar Asset A: Asset B:$ Asset C: Compute the depreciation expense for 2019 under each method. If required, round to the nearest dollar Asset A: Asset B: Asset C Previous Next Check My Work 1 more Check My Work uses remaining nd Et Submit Assignment for Grac

Solution

Part 1 - Reducing/Declining Balnce Depreciation Method for Asset C

Explanation:-

Rate of depreciation = $6375/$17000*100 = 37.5%

Depreciation for 2016 = $17000*37.5% = $6375

Residual value at the end of year 2016 = ($17000 - $6375) = $10625

Depreciation for year 2017 = ($10625*37.5%) = $3984

Residual value at the end of 2017 = ($10625 - $3984) = $6641

(Since the rate of depreciation and method of depreciation satisfies the calculated amount of depreciation in question hence it is residual/Declining balance method of depreciation

Part 2

Asset A

Method = Straight line method of depreciation

Estimated life=(Asset cost - salvage value)/Depreciation per year

Estimated life = ($17000 - $1000)/$4000 = 4 years

Depreciation for Year 2018

= (Asset cost - Salvage value)/Estimated life

= ($17000 - $1000)/4 = $4000

Depreciation for year 2019

= (Asset cost - Salvage value)/Estimated life

= ($17000 - $1000)/4 year = $4000

Asset B

Depreciation Method = Sum of years digit method

Sum of year = 1 year + 2 year + 3 year + 4 year = 10 years

Purchase date = January 2016

Life = 4 years

Scrap date = December 2019

Depreciation base

(Asset cost - salvage value)

Depreciation fraction

(Remaining life/Sum of years)

$16000

Asset C

Method - Residual/Declining balance method

Residual value at the end of year 2017 (from part 1) = $6641

$4151

($6641 - $2490)

Depreciation for Year 2018 = (Asset cost - Salvage value)/Estimated life = ($17000 - $1000)/4 = $4000 Depreciation for year 2019 = (Asset cost - Salvage value)/Estimated life = ($17000 - $1000)/4 year = $4000