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Chapter 9 In Class Exercises: Depreciation Methods Scenario: Cost = Useful Life (Years) = Useful Life (Hours) = Salvage Value = a) Calculate the SL

Chapter 9 In Class Exercises: Depreciation Methods

Scenario: Cost = Useful Life (Years) = Useful Life (Hours) = Salvage Value =

a) Calculate the SL annual rate:

30,000 5 140,000 2,000

1) Depreciable Cost = Cost - Salvage ValueDepreciable Cost = -

2) Calculate the Double DB rate:

SL Rate x2 -

= Double DB rate

b) Calculate depreciation expense, accumulated depreciation and book value for the life of the

asset. Depreciable Depreciation Annual Depr Accum.

Year Cost

Rate Exp Depr. Book Value

2010

2011

2012

2013

2014

= Depr. Cost

= Salvage Value

2) Method 2: Units of Activity a) Calculate the Units of Activity rate:

b) Calculate depreciation expense, accumulated depreciation and book value for the life of the

asset. Year Activity Rate

Annual Depr Exp

Accum. Depr. Book Value

SL Rate =

x2 DDB Rate =

Units of Depreciation

2010

2011

2012

2013

2014

30,000

20,000

25,000

40,000

25,000

= Depr. Cost

= Salvage Value

140,000

3) Method 3: Double-Declining Balance

a) Calculate depreciation expense, accumulated depreciation and book value for the life of the asset.

Book Value Depreciation Annual Depr Accum. Year Beg. Of Year Rate Exp Depr. Book Value

2010

2011

2012

2013

2014

30,000

= Salvage Value

PLUG

= Depr. Cost

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