Question

ENGINEERING ECONOMY: Based on the ADS method, determine the depreciation amount and the book value at...

ENGINEERING ECONOMY: Based on the ADS method, determine the depreciation amount and the book value at the end of
the third year of an asset purchased by a construction company. The asset cost is $150,000 with a
market value of $35,000 at the end of useful life of 6 years.

Please answer by using equations, not excel. Thank you

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:-

In the given case Under ADS( Alternative Depreciation system) we should use only Straight line method depreciation in which the Depreciation amount is equally Deducted from each year .

=> So the depreciation amount = [Cost - salvage value/ useful life] = [$150000-$35000/ 6 years] = $19167 per year. So for the 3rd Year the Depreciation amount is also $19167.

=>Book value is the value of assets after deducting the depreciation amount. so here.Book value at the end of Year 1 is = ($15000- $19167 )= $130833. Book value at the End of year 2 is = ($130833- $19167) = $111666. Book value at the End of Year 3 is = ($111666- $19167) = $92499

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ENGINEERING ECONOMY: Based on the units of production method, determine the deprecation allowance and book value...
ENGINEERING ECONOMY: Based on the units of production method, determine the deprecation allowance and book value in year 5 using this information: Cost basis= $100,000 Salvage value= $20,000 Life span= 5 years Production volume per year| 1:20,000 2: 30,000 3: 40,000 4: 50,000 5:60,000 Please show all work using equations. Thank you!
Determine the depreciation and book value based on the information provided. First & Second Street purchased...
Determine the depreciation and book value based on the information provided. First & Second Street purchased equipment for $26,000. It is estimated to have a salvage value of $1,000. The equipment has a 5-year life. -If the asset was purchased on 4/1/16, what is the depreciation recorded in 2016? -If the asset was purchased on 4/1/16, what is the depreciation recorded in 2017? -What is the amount of accumulated Depreciation at 12/31/17? -What is the book value at December 31,...
"Compute the book value at the end of 5 years using double-declining-balance (DDB) depreciation schedule for...
"Compute the book value at the end of 5 years using double-declining-balance (DDB) depreciation schedule for the following asset: Cost of the asset, I: $298,000. Useful life, N: 7 years. Salvage value, S: $35,000."
Cost of asset: $10000 Useful life: 5 years Salvage Value: $2000 Depreciation Method: DDB a) What...
Cost of asset: $10000 Useful life: 5 years Salvage Value: $2000 Depreciation Method: DDB a) What is the value of α? 0.4 b) What is the amount of depreciation for the second year of use of the asset? $2400 c) What is the book value of the asset at the end of the fourth year? $2000
"Compute the book value at the end of 4 years using double-declining-balance (DDB) depreciation schedule for...
"Compute the book value at the end of 4 years using double-declining-balance (DDB) depreciation schedule for the following asset: Cost of the asset, I: $300,000. Useful life, N: 8 years. Salvage value, S: $34,000."
The book value of an asset when using double-declining-balance depreciation is always greater than the book...
The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same. TRUE OR FALSE?
An asset costs ?101,000.00. Additional initial expenses amount to ?3,900.00. Scrap value is 8% of the...
An asset costs ?101,000.00. Additional initial expenses amount to ?3,900.00. Scrap value is 8% of the first cost and book value at the end of 2 years is ?89,000.00. Determine the useful life of the assets in years, using straight line method.
Prepare the calculation using the prime cost method to determine the deduction in value on a...
Prepare the calculation using the prime cost method to determine the deduction in value on a depreciating asset purchased 55 days into the financial year for $150,000 and an economic life of three years. Describe how a depreciation schedule assists an organisation to maximise its taxation deductions.
Based on the following information: 1) Equipment cost: 63,200 2) Salvage value: 12,000 3) Useful life:...
Based on the following information: 1) Equipment cost: 63,200 2) Salvage value: 12,000 3) Useful life: 6 Years 4) Equipment purchased on 4/30/Y1 What is the Depreciation Expense entry amount at the end of Year 2 using Double Declining Balance Depreciation method? What is the Book Value at the beginning of Year 3 using Double Declining Balance Depreciation method?
An asset was purchased for $57,000 and originally estimated to have a useful life of 10...
An asset was purchased for $57,000 and originally estimated to have a useful life of 10 years with a residual value of $4,100. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $1,640. a. Determine the amount of the annual depreciation for the first two years. $ b. Determine the book value at the end of Year 2. $ c. Determine the depreciation...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT