Question

A surface mount placement machine is being purchased for $1548000; it has an estimated useful life of 8 years and a salvage value of $70000 at that time. Determine the depreciation allowance for the 5th year and the book value at the end of the 5th year using SLN.
d₅ = $  
B₅ = $

A surface mount placement machine is being purchased for $1419000; it has an estimated useful life of 8 years and a salvage value of $55200 at that time. Determine the depreciation allowance for the 5th year and the book value at the end of the 5th year using Declining Balance where the depreciation rate is determined by the salvage value and time in service.
what is the depreciation rate?  %
d₅ = $  
B₅ = $

A surface mount placement machine is being purchased for $1773000; it has an estimated useful life of 8 years and a salvage value of $81400 at that time. Determine the depreciation allowance for the 5th year and the book value at the end of the 5th year using Double Declining Balance.
what is the depreciation rate?  %
d₅ = $  
B₅ = $

Answer 1

1. Cost of machine = $1548000

Useful life = 8 years

Salvage value = $70000

Depreciation by SLM method = (Cost of machine - Salvage value) / Useful life

= ($1548000 - $70000) / 8

= $1478000 / 8

= $184750 Depreciation for year 1

Depreciation for 5th year = $184750

Book value at end of 5th year = Cost of machine - total depreciation for 5 years

= $1548000 - $923750

= $624250

2. Cost of machine =$1419000

Useful life = 8 years

Salvage value = $55200

Depreciation = (Cost of machine - salvage life) / 8

= ($1419000 - $55200) / 8

= $1363800 / 8

= $170475

Depreciation rate = $170475 / $1363800 x 100

= 0.125 x 100

= 12.5 %

Depreciation for Year 1 = $170475

Book value at the end of year 1 = $1193325

Year 2 = 12.5% x $1193325

= 149165.625

Book value at the end of year 2 = 1044159.375

Depreciation for the year 3 = 130519.921875

Book value at the end of year 3 = 913639.45313

Depreciation for the year 4 = 114204.931641

Book value at the end of year 4 = 799434.521489

Depreciation for the year 5 = 99929.3 99929.3151861

Book value at the end of year 5 = 699505.2 (699505.206303) Rounded off

3. Cost of machine = $1773000

Useful life = 8 years

Salvage value = $81400

Depreciation = ($1773000 - 81400) / 8

= $211450

Depreciation rate = 211450 / 1691600

= 12.5%

Double Declining Depreciation rate = 12.5% x 2

= 25%

Depreciation for Year 1 = 1691600 x 25%

= $422900

Book value at the end of Year 1 = $1268700

Depreciation for Year 2 = $317175

Book value at the end of Year 2 = $951525

Depreciation for Year 3 = $237881.25

Book value at the end of Year 3 = $713643.75

Depreciation for Year 4 = $178410.9375

Book value at the end of Year 4 = 535232.8125

Depreciation for the Year 5 = 133808 (133808.203125) Rounded off

Book value at the end of Year 5 = 401425 (401424.609375) Rounded off