Can you please solve part 2. required question with explanation? thank you! The

Question

Can you please solve part 2. required question with explanation? thank you!

The Blue Moon Motel has purchased a new computer for its own use. Using the following information, determine the proper amount to be capitalized in the asset account Equipment. The invoice includes the price of the computer, the sales tax. and maintenance. The Blue Spruce Inn has purchased a shuttle bus to transport guests to and from a local sta lodge. He cost of the bus is 580,000; its salvage value is $10,000- and its lire is five years. Required: Calculate the depreciation under each of the following methods: Sum of the years' digits Double declining balance

Explanation / Answer

Depreciation under straight line method : (cost -salvage)/life

                                                      = (80000 - 10000)/5

                                                      = 70000 / 5

                                                       = 14000 per year

sum of years digit method:

Depreciable base =cost -salvage = 80000-10000 = 70000

Sum of digits = 5+4+3+2+1 = 15

Depreciation for year 2 = 70000 * 4 /15 = 18666.67

Double declining balance methd:

Rate for depreciation = 2 / life = 2 /5 = .40 or 40%

Depreciation for 1 year = cost * rate

                                 = 80000*.4 = 32000

For year 2 = (80000-32000) *.40

                = 48000*.4

                   = $ 19200

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