Judds Company purchased a new plant asset on April 1, 2008, at a cost of $711,000. It

Question:

Judds Company purchased a new plant asset on April 1, 2008, at a cost of $711,000. It was estimated to have a service life of 20 years and a salvage value of $60,000. Judds’ accounting period is the calendar year.

Instructions

(a) Compute the depreciation for this asset for 2008 and 2009 using the sum-of-the-years’-digits method.

(b) Compute the depreciation for this asset for 2008 and 2009 using the double-declining balance method.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...