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Sunday, November 14, 2010

Valix Finacc vol 1 Problem 17-3

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-3


Depreciation Table – Straight Line

 

      Accumulated

Year                 Particular                  Depreciation           depreciation               Book value

                 Acquisition cost                                                                                          635,000

2008                                                        120,000                      120,000             515,000

2009                                                        120,000                      240,000             395,000

2010                                                       120,000                      360,000             275,000

2011                                                       120,000                      480,000             155,000

2012                                                        120,000                      600,000               35,000

                                                                                    600,000


Depreciation Table – Service Hours Method

                                                                                                                                                                                                                                         Accumulated

Year                 Particular                 Depreciation           depreciation               Book value

         Acquisition cost                                                                                        635,000

2008                 14,000 x 10                      140,000                     140,000                         495,000

2009                 13,000 x 10                     130,000                     270,000                         365,000

2010                 10,000 x 10                      100,000                     370,000                         265,000

2011                 11,000 x 10                     110,000                     480,000                         155,000

2012                 12,000 x 10                     120,000                     600,000                           35,000

                                                                                    600,000


Depreciation rate per hour = 600,000 / 60,000 = 10


            

Depreciation Table – Production Method

                                                                                                                                                                                                                                                                                                Accumulated
Year                 Particular                Depreciation              Depreciation              Book value
       Acquisition cost                                                                                        635,000
2008                 34,000 x 4                        136,000                      136,000             499,000

2009                 32,000 x 4                        128,000                      264,000             371,000

2010                 25,000 x 4                       100,000                      364,000             271,000

2011                 29,000 x 4                        116,000                      480,000             155,000

2012                 30,000 x 4                        120,000                      600,000               35,000

                                                                                    600,000

Depreciation rate per unit of output = 600,000 / 150,000 = 4
                                                                                                                                               

Depreciation Table – Sum of Years’ Digits


                                                                                                                       Accumulated

Year                 Particular               Depreciation               depreciation              Book value

                   Acquisition cost                                                                                        635,000

2008               5/15 x 600,000                  200,000                       200,000             435,000

2009               4/15 x 600,000                  160,000                       360,000             275,000

2010               3/15 x 600,000                  120,000                       480,000             155,000

2011               2/15 x 600,000                    80,000                     560,000               75,000

2012               1/15 x 600,000                    40,000                      600,000               35,000

                                                                                   600,000
           
SYD = 1 + 2 + 3 + 4 + 5 = 15

Depreciation Table – Double Declining Balance                                                                                                                                                                               Accumulated

Year                 Particular              Depreciation              depreciation                 Book value

                  Acquisition cost                                                                                         635,000

2008              40% x 635,000                   254,000                      254,000                            381,000

2009              40% x 381,000                   152,400                      406,400                            228,600

2010              40% x 228,600                     91,440                     497,840                            137,160

2011              40% x 137,160                     54,864                     552,704                              82,296

2012            82,296 – 35,000                     47,296                     600,000                              35,000

                                                                                 600,000

Fixed rate = 100% / 5 = 20% x 2 = 40%

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