Question

- Orange Inc. purchased a new truck on Oct 1, 2011 for $160,000. The truck was placed in service on the same day. The truck had an estimated life of 5 years with an estimated residual value of $10,000.

Use excel spreadsheet to prepare depreciation tables which include depreciation expenses, accumulated depreciation, and book value of the truck over the asset's life under straight line, double decline balance and sum-of-years digits methods. Mango record depreciation to the closest whole month for assets placed in service during the year.

Answer 1

Striaght Line Method
Year	Beginning Value	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	7,500	7,500	152,500
2012	152,500	30,000	37,500	122,500
2013	122,500	30,000	67,500	92,500
2014	92,500	30,000	97,500	62,500
2015	62,500	30,000	127,500	32,500
2016	32,500	22,500	150,000	10,000

Under Straight Line Depreciation Yearly Depreciation will be = (cost - Salvage) / use ful life = 150000 / 5 = 30000

In First Year the deprecaition for 3 month from october and in 6th year remaining deprecaition amount will setoff.

Double Decling Balance Method
Year	Beginning Value	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	16,000	16,000	144,000
2012	144,000	57,600	73,600	86,400
2013	86,400	34,560	108,160	51,840
2014	51,840	20,736	128,896	31,104
2015	31,104	12,442	141,338	18,662
2016	18,662	7,465	148,803	11,197
2017	11,197	1,197	150,000	10,000

under DDB Method depreciation Rate is 40% (If using Straight line Method the rate will be 20% that is 100% divided by 5 Years)

In first year recorded 3 months only.

Sum Of ther Year Digits
Year	Beginning Value	Depreciation Percent	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	8.33%	12,500	12,500	147,500
2012	147,500	31.67%	47,500	60,000	100,000
2013	100,000	25%	37,500	97,500	62,500
2014	62,500	18.33%	27,500	125,000	35,000
2015	35,000	11.67%	17,500	142,500	17,500
2016	17,500	5%	7,500	150,000	10,000

Sum of Total Years = 5+4+3+2+1 = 15 (useful life is 5 year)in Sum of Year Digit percentage for first year

in First Year = 150000 x 5/15 x 1/ 4 (Depreciation base is 150000) = 12500

In Second Year =4.75 / 15 = 31.67%

In third Year = 3.75 / 15 = 25%

its going on

and in last year 0.75 / 15 = 5%