Question
In: Accounting
1. The new wood cutting machine will cost $420,000 and its depreciation is over 10 years...
1. The new wood cutting machine will cost $420,000 and its depreciation is over 10 years to zero using the straight-line method. At the end of 5 years, the estimated value of the wood cutting machine is $50,000. How mush is the first year to fifth year depreciation?
2. The total cost of the required 3D printers is $750,000 and its depreciation is over 15 years to zero using the straight-line method. At the end of 5 years, the estimated value of the 3D printers is $300,000. How mush is the first year and fifth year depreciation?
Solutions
Expert Solution
Question 1
Answer--------------$210,000 and $42,000 per year
Working
| Straight line Method | ||
| A | Cost | $ 420,000 |
| B | Residual Value | $ 0 |
| C=A - B | Depreciable base | $ 420,000 |
| D | Life [in years left ] | 10 |
| E=C/D | Annual SLM depreciation | $ 42,000 |
.
| Depreciation schedule-Straight line method | ||||
| Year | Book Value | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 1 | $ 420,000.00 | $ 42,000.00 | $ 42,000.00 | $ 378,000.00 |
| 2 | $ 378,000.00 | $ 42,000.00 | $ 84,000.00 | $ 336,000.00 |
| 3 | $ 336,000.00 | $ 42,000.00 | $ 126,000.00 | $ 294,000.00 |
| 4 | $ 294,000.00 | $ 42,000.00 | $ 168,000.00 | $ 252,000.00 |
| 5 | $ 252,000.00 | $ 42,000.00 | $ 210,000.00 | $ 210,000.00 |
.
Question 2.
Answer--------------Depreciation of first year = $50000 and fifth year = $50000.
Working
| Straight line Method | ||
| A | Cost | $ 750,000 |
| B | Residual Value | $ 0 |
| C=A - B | Depreciable base | $ 750,000 |
| D | Life [in years left ] | 15 |
| E=C/D | Annual SLM depreciation | $ 50,000 |
.
| Depreciation schedule-Straight line method | ||||
| Year | Book Value | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 1 | $ 750,000.00 | $ 50,000.00 | $ 50,000.00 | $ 700,000.00 |
| 2 | $ 700,000.00 | $ 50,000.00 | $ 100,000.00 | $ 650,000.00 |
| 3 | $ 650,000.00 | $ 50,000.00 | $ 150,000.00 | $ 600,000.00 |
| 4 | $ 600,000.00 | $ 50,000.00 | $ 200,000.00 | $ 550,000.00 |
| 5 | $ 550,000.00 | $ 50,000.00 | $ 250,000.00 | $ 500,000.00 |
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