acc422 wk 4 p11-1
DESCRIPTION
ACC422 Wk 4 P11-1TRANSCRIPT
-
(a) 1. Depreciation Base Computation:
Purchase price............................... $85,000
Less: Purchase discount (2%) ...... 1,700
Freight$in ........................................ 800
Installation ..................................... 3,800
87,900
Less: Salvage value ..................... 1,500
Depreciation base ......................... $86,400
2014.Straight line: ($86,400 8 years) X 2/3 year = $7,200
2. Sum$of$the$years$digits for 2015
Machine Year Total Depreciation 2014 2015
1 8/36 X $86,400 = $19,200 $12,800 $6,400
2 7/36 X $86,400 = $16,800 11,200
$17,600
$19,200 X 2/3 = $12,800
$19,200 X 1/3 = $ 6,400
$16,800 X 2/3 = $11,200
3. Double$declining$balance for 2014
($87,900 X 25% X 2/3) = $14,650
(b) An activity method.