Time-Factor Methods of Depreciation A delivery truck was acquired by Navarro Inc
ID: 2397773 • Letter: T
Question
Time-Factor Methods of Depreciation
A delivery truck was acquired by Navarro Inc. for $40,000 on January 1, 20Y1. The truck was estimated to have a three-year life and a trade-in value at the end of that time of $10,000. The following depreciation methods are being considered:
Depreciation is to be calculated by the straight-line method.
Depreciation is to be calculated by the sum-of-the-years’-digits method.
Depreciation is to be calculated by the double-declining-balance method.
a. Prepare a table reporting periodic depreciation and asset book value over a three-year period for the straight-line method.
Navarro Inc.
Straight-line Depreciation Calculation
Depreciation
Accumulated
Depreciation
Asset
Book Value
$
20Y1
$
$
20Y2
20Y3
Total
$
b. Prepare a table reporting periodic depreciation and asset book value over a three-year period for the sum-of-the-years'-digits method. Round interim calculations to five decimal places and final answer to the nearest dollar.
Navarro Inc.
Sum-of-the-years'-digits Depreciation Calculation
Depreciation
Accumulated
Depreciation
Asset
Book Value
$
20Y1
$
$
20Y2
20Y3
Total
$
c. Prepare a table reporting periodic depreciation and asset book value over a three-year period for the double-declining-balance method. Round percentage values in the intermediate calculations to one decimal place.
Navarro Inc.
Double-declining-balance Depreciation Calculation
Depreciation
Accumulated
Depreciation
Asset
Book Value
$
20Y1
$
$
20Y2
20Y3
Total
$
Hidea. Prepare a table reporting periodic depreciation and asset book value over a three-year period for the straight-line method.
Navarro Inc.
Straight-line Depreciation Calculation
Depreciation
Accumulated
Depreciation
Asset
Book Value
$
20Y1
$
$
20Y2
20Y3
Total
$
Explanation / Answer
a) Straight line method :
b) Sum of year digit method :
c) Double decline balance
Depreciation Accumlated dep Asset book value 40000 20Y1 10000 10000 30000 20Y2 10000 20000 20000 20Y3 10000 30000 10000 Total 30000