Homework SoursePlease Solve the following problem A Hospital just acquired
| 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 | ||||||
Solution
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 |
