Question
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On January 2, 2019, the Hanover Company purchased some office equipment for $24,000. The equipment is...
On January 2, 2019, the Hanover Company purchased some office equipment for $24,000. The equipment is expected to have a useful life of five years and a salvage value of $3,000. Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method, the double-declining-balance method, and the sum-of-the-years'-digits method
Solutions
Expert Solution
| Total Cost | $24,000 | ||||
| Expected Life (in years) | 5 | ||||
| Salvage Value | $3,000 | ||||
| Total Depreciation | $21,000 | ||||
| Depreciation Schedule: Straight-Line Method | |||||
| Year | Rate | Depreciation | Accumulated Depreciation | Book Value | |
| 0 | $0.00 | $0.00 | $24,000.00 | ||
| 1 | 1/5 | $4,200 | $4,200 | $19,800 | |
| 2 | 1/5 | $4,200 | $8,400 | $15,600 | |
| 3 | 1/5 | $4,200 | $12,600 | $11,400 | |
| Double-declining-balance | |||||
| Year | Rate | Depreciation | Accumulated Depreciation | Book Value | |
| 0 | $0.00 | $0.00 | $24,000.00 | ||
| 1 | 2/5 | $9,600 | $9,600 | $14,400 | |
| 2 | 2/5 | $5,760 | $15,360 | $8,640 | |
| 3 | 2/5 | $3,456 | $18,816 | $5,184 | |
| Sum-of-the-years'-digits | |||||
| Year | Rate | Depreciation | Accumulated Depreciation | Book Value | |
| 0 | $0.00 | $0.00 | $24,000.00 | ||
| 1 | 1/3 | $7,000 | $7,000 | $17,000 | |
| 2 | 4/15 | $5,600 | $12,600 | $11,400 | |
| 3 | 1/5 | $4,200 | $16,800 | $7,200 | |
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