Chapter 17 Problem 17-31 to 34
Problem 17-31 Answer B
Straight line rate (100% / 5 years) 20%
Fixed rate (20% x 2) 40%
2006 depreciation (5,000,000 x 40%) 2,000,000
2007 depreciation (3,000,000 x 40%) 1,200,000
Accumulated depreciation, December 31, 2007 3,200,000
Depreciation for 2008 – straight line (5,000,000 – 3,200,000 / 3) 600,000
Accumulated depreciation, December 31, 2008 3,800,000
Problem 17-32 Answer A
Cost – 1/1/2005 7,200,000
Accumulated depreciation – 12/31/2007 (7,200,000 / 10 x 3) 2,160,000
Book value – 12/31/2007 5,040,000
SYD for the remaining life of 7 years (1 + 2 + 3 + 4 + 5 + 6 + 7) 28
Depreciation for 2008 (5,040,000 x 7/28) 1,260,000
Problem 17-33 Answer B
Annual depreciation (1,536,000 / 8) 192,000
235
Problem 17-34 Answer B
Fixed rate (100% / 4 x 2) 50%
Cost 6,000,000
Depreciation for 2007 (50% x 6,000,000) 3,000,000
Book value – 1/1/2008 3,000,000
Residual value ( 600,000)
Maximum depreciation in 2008 2,400,000
Fixed rate in 2008 (100% / 2 x 2) 100%
This means that the computers should be fully depreciated in 2008. Since there is a residual value of P600,000, the maximum depreciation for 2008 is equal to the book value of P3,000,000 minus the residual value of P600,000 or P2,400,000.
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