Question

Partial-year depreciation
DATA
Cost		$100,000
Estimated residual value		$6,000
Estimated useful life (in years)		8
Placed into service on		May 1
End on the fiscal year		December 31
Using formulas and cell references, perform the required analysis, and input your answers into the Amounts column. Transfer the numeric results for the green entry cells (C13:C16) into the appropriate fields in CNOWv2 for grading.
		Amounts	Formulas
a.	Depreciation (Straight-line method), Year 1
	Depreciation (Straight-line method), Year 2
b.	Depreciation (DDB method), Year 1
	Depreciation (DDB method), Year 2

Partial-year depreciation

Equipment acquired at a cost of $100,000 has an estimated residual value of $6,000 and an estimated useful life of 8 years. It was placed in service on May 1 of the current fiscal year, which ends on December 31. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

1. Determine the depreciation for the current fiscal year and for the following fiscal year by the straight-line method. Round your answers to the nearest dollar.

   	Depreciation
   Year 1	$  fill in the blank 2
   Year 2	$  fill in the blank 3

2. Determine the depreciation for the current fiscal year and for the following fiscal year by the double-declining-balance method. Do not round the double-declining balance rate. Round your answers to the nearest dollar.

   	Depreciation
   Year 1	$  fill in the blank 4
   Year 2	$  fill in the blank 5

Answer 1

a.	SL Year 1	7,833	(Cost - Residual value)/Useful life x 8/12
	SL Year 2	11,750	(Cost - Residual value)/Useful life
b.	DDB Year 1	16,667	(Cost - Accumulated depreciation) x 2 x (1/Useful life) x 8/12
	DDB Year 2	20,833	(Cost - Accumulated depreciation) x 2 x (1/Useful life)