Asset & Date Purchased Method of Depreciation Salvage Value Cost Delivery Truck
ID: 2433104 • Letter: A
Question
Asset & Date Purchased Method of Depreciation Salvage Value Cost Delivery Truck (4/30/15) Unit of Activity $60,000$11,000 Office Furniture 2 Straight Line $15,000 $300 Double Declining 3. Computer (4/1/15) $5,000 $700 The delivery truck is estimated to have a life cycle of 200,000 miles. It was driven for 1 16,500 miles in 2015 & 24,600 miles in 2016 2. The Office Furniture has a life expectancy of 7 years. 3. The Computer has a life expectancy of 4 years. Round any per unit calculations to the nearest half penny. Round all annual depreciation expenses to the nearest dollar. Use this information to compute for Fiscal Year 2016 the following values: 1. Book Value of the Delivery Truck 2. Depreciation Expense Truck 3. Book Value of the Office Furniture 4. Depreciation Expense Office Furniture 5. Book Value of the Computer 6. Depreciation Expense- ComputerExplanation / Answer
Fiscal Year 2016
Book Value
Depreciation expense
Delivery Truck
$ 49,930.50
$ 6,027.00
Office Furniture
$ 11,675.00
$ 2,100.00
Computer
$ 1,562.50
$ 1,562.50
Unit of Activity (Delivery truck)
A
Cost
$ 60,000.00
B
Residual Value
$ 11,000.00
C=A - B
Depreciable base
$ 49,000.00
D
Usage
200000
E
Depreciation per Mile
0.2
Year
Book Value
Usage
Depreciation expense
Ending Book Value
Accumulated Depreciation
2015
$ 60,000.00
16500
$ 4,042.50
$ 55,957.50
$ 4,042.50
2016
$ 55,957.50
24600
$ 6,027.00
$ 49,930.50
$ 10,069.50
Straight line (Office Furniture)
A
Cost
$ 15,000.00
B
Residual Value
$ 300.00
C=A - B
Depreciable base
$ 14,700.00
D
Life [in years]
7
E=C/D
Annual SLM depreciation
$ 2,100.00
Year
Book Value
Depreciation expense
Ending Book Value
Accumulated Depreciation
2015
$ 15,000.00
$ 1,225.00
$ 13,775.00
$ 1,225.00
2016
$ 13,775.00
$ 2,100.00
$ 11,675.00
$ 3,325.00
Depreciation in 2015 is for 7 months only
Double declining Method (Computer)
A
Cost
$ 5,000.00
B
Residual Value
$ 700.00
C=A - B
Depreciable base
$ 4,300.00
D
Life [in years]
4
E=C/D
Annual SLM depreciation
$ 1,075.00
F=E/C
SLM Rate
25.00%
G=F x 2
DDB Rate
50.00%
Year
Beginning Book Value
Depreciation rate
Depreciation expense
Ending Book Value
Accumulated Depreciation
2015
$ 5,000.00
50.00%
1875.00
$ 3,125.00
1875
2016
$ 3,125.00
50.00%
1562.50
$ 1,562.50
3437.5
Depreciation in 2015 is for 9 months only.
Fiscal Year 2016
Book Value
Depreciation expense
Delivery Truck
$ 49,930.50
$ 6,027.00
Office Furniture
$ 11,675.00
$ 2,100.00
Computer
$ 1,562.50
$ 1,562.50