Valix Finacc vol 1 Problem 17-6

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-6

a. Sum of years’ digit                             

    April 1, 2008 – March 31, 2009 (1,080,000 x 8/36)                                                      240,000

    April 1, 2009 – March 31, 2010 (1,080,000 x 7/36)                                                      210,000                                                      

    Depreciation from April 1 to December 31, 2008 (240,000 x 9/12)               180,000

     Depreciation for 2009:

            January 1 – March 31 (240,000 x 3/12)                                                    60,000

            April 1 – December 31 (210,000 x 9/12)                                                            157,500

                                                                                                                                    217,500

b. Double declining balance

    Fixed rate = 100 / 8 = 12.5 x 2 = 25%

    2008  (1,200,000 x 25% x 9/12)                                                                                   225,000

    2009  (1,200,000 – 225,000 x 25%)                                                                              243,750