Question

# Waterway Company purchases equipment on January 1, Year 1, at a cost of \$529,970. The asset...

Waterway Company purchases equipment on January 1, Year 1, at a cost of \$529,970. The asset is expected to have a service life of 12 years and a salvage value of \$45,200.

Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. (Round answers to 0 decimal places, e.g. 5,125.)
 Depreciation for Year 1 \$ Depreciation for Year 2 \$ Depreciation for Year 3 \$
Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method.
 Depreciation for Year 1 \$ Depreciation for Year 2 \$ Depreciation for Year 3 \$
Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (Round depreciation rate to 2 decimal places, e.g. 15.84%. Round answers to 0 decimal places, e.g. 45,892.)
 Depreciation for Year 1 \$ Depreciation for Year 2 \$ Depreciation for Year 3 \$

Straight line method

 Year 1 (529,970-45,200)/12 40,397 Year 2 40,397 Year 3 40,397

Sum of years digits.

Denominator = (12*13)/2 = 78

 Year 1 (529,970-45,200)*12/78 74,580 Year 2 (529,970-45,200)*11/78 68,365 Year 3 (529,970-45,200)*10/78 62,150

Double declining method

Rate = 200/Useful life = 200/12 = 16.67%

 Year 1 (529,970*16.67%) 88,345 Year 2 (529,970-88,345)*16.67% 73,618 Year 3 (529,970-88,345-73,618)*16.67% 61,346

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