Question

A digitally controlled plane for manufacturing furniture is purchased on April 1 by La-Z-boy for $66,000....

A digitally controlled plane for manufacturing furniture is purchased on April 1 by La-Z-boy for $66,000. It is expected to last 12 years and have a salvage value of $5,000.

Using the information above answer questions A-C below:

A. Using the Declining Balance method (DB), what is the depreciation write-off for year 4 (d4)?

A.    $10,300

B.     $ 8,300

C.    $ 6,700

D.    $ 5,400

B. Using the Double Declining Balance method (DDB), what is the book value for year 4 (B4)?

A.    $31,800

B.     $38,200

C.    $45,800

D.    $49,000

C. Using the Double Declining Balance switching to Straight-Line method (DDB-SL), what is the Straight-Line depreciation calculated amount for year 3 (SL - d3)?

A.    $6,900

B.     $6,400

C.    $5,100

D.    $4,100

Please do not use Excel and explain where all values come from. Good answers get good ratings!

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Homework Answers

Answer #1

ans 1
SLM Depreciation
Cost-salvage value/useful life
(66000-5000)/12 5083 depreciation per year

Year 1 Depreciation Rounded off
5083*9/12 3812.25 3812
Year 4 5083.33 5083
Year 8 5083.33 5083

ans 2
Declining balance method
DDB rate=1/12 useful life*200% 16.67 %

Year Beg, bal Deprate Dep Ending book value
1 for 9 months 66000 16.67 8250 57750
2 57750 16.67 9625 48125
3 48125 16.67 8021 40104
4 40104 16.67 6684 33420
5 33420 16.67 5570 27850
6 27850 16.67 4642 23208
7 23208 16.67 3868 19340
8 19340 16.67 3223 16117

Year
1 8250
4 6684
8 3223

Only part A and B...

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