eqaution sheets ote Show all of your work to arrive at a fin

eqaution sheets

ote: Show all of your work to arrive at a final result 1) Using sum-of-the-years-digits depreciation, determine the depreciation schedule for an asset that has an initial cost of $140,000, a salvage value of $20,000, and a depreciation life of three years.

Solution

Year

Book Value
Year Start

Total Cost
Depreciable

Depreciation
Percent

Depreciation
Expense

Accumulated
Depreciation

Book Value
Year End

1

$140,000

$120,000.00

50%

$60,000

$60,000

$80,000

2

$80,000

$120,000.00

33%

$40,000

$100,000

$40,000

3

$40,000

$120,000.00

17%

$20,000

$120,000

$20,000

Depreciation =

No. of life remaining including current year/ Sum of all digit of life * (Purchase price – Salvage Value)

Sum of all digits will be 6 (3+2+1)

1^st year = 3/6*120,000 = 60,000

3^rd year = 2/6*120,000 = 40,000

4^th year = 1/6*120,000 = 20,000

Year	Book Value Year Start	Total Cost Depreciable	Depreciation Percent	Depreciation Expense	Accumulated Depreciation	Book Value Year End
1	$140,000	$120,000.00	50%	$60,000	$60,000	$80,000
2	$80,000	$120,000.00	33%	$40,000	$100,000	$40,000
3	$40,000	$120,000.00	17%	$20,000	$120,000	$20,000