Question

On January 2, 2016, the Unit Manufacturing Company purchased manufacturing equipment for $83,000. The equipment is expected to have a useful life of six years and a salvage value of $2,000. 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.

Answer 1

SLM
Cost of Machine	83,000.00
Salvage Value	2,000.00
Life in years	6.00
Particulars	2016	2017	2018
Opening Balance	83,000.00	69,500.00	56,000.00
Depreciation(83000-2000)/6	13,500.00	13,500.00	13,500.00
Closing balance	69,500.00	56,000.00	42,500.00
Life	6 Years
Double decling balance method rate = 1/6%*2	33.33%
Particulars	2016	2017	2,018.00
Opening Balance	83,000.00	55,333.36	36,888.93
Depreciation at 33.33%	27,666.64	18,444.44	12,296.30
Closing balance	55,333.36	36,888.93	24,592.63
Sum of years digits Method
Life in years	6.00
Cost of Asset	83,000.00
Salavge Value	2,000.00
Depreciable Value =	81,000.00
sum of the years' digits depreciation calculation is = n(n+1)/2 = 6(6+1)/2 = 6*7/2 = 42/2 = 21
Year	Depreciation	WN
2,016.00	23,142.86	81000/21*6
2,017.00	19,285.71	81000/21*5
2,018.00	15,428.57	81000/21*4
	57,857.14