Modules 9.03- Compare the two depreciation models for straight-line depreciation. Note the difference between Models A & B has to do with the placed-in-service date for the asset. If not placed in service on the first day of the year, a proration is required. At the end of 60 months, the remaining balance should equal the salvage value of the asset. You learned about Salvage Value (residual Value) in your readings.

9.03 Calculate capitalized cost for basis of deprecation for Items below: Truck purchased, upgraded and placed in service Sep 10: Date Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 5 Dec 1 Description Amount Include Notes Purchase of Truck 20,000 20.000 Freight 500 500 Sales Tax 1500 1 500 License Plates 360 Exclude-Recurrent Llability Insurance 900 Exclude-Recurrent Collision insurance 300 Exclude Recurrent Hydraulic Lift 5000 5.000 Special Paint 1000 1.000 Total Capitalized Cost: 28,000 Building purchased June 1, upgraded and placed in service August 1: Notes Notincludable not includable Date June 1 June 1 June 1 June 1 June 1 June 15 July 1 Nov 10 Description Purchase of Building Land Vandalism Title fees Real Property Taxes (County) Pave parking lot Outdoor lighting Fences Total Capitalized Cost: Amount Include 600,000 600,000 200.000 12000 1,500 1,500 6,000 40,000 40.000 30,000 30.000 20,000 671,500 Exclude-recurrent over 90 days Main Frame computer purchased Jan 1. placed in service Feb 1: Date Description Amount Include Notes Jan 2 Raised flooring 40,000 40,000 Jan 2 Air Conditioning 25,000 25,000 Jan 6 Purchase of computer 700,000 700,000 Jane Freight 7,000 7,000 Jan 7 Installation (1 week) 30,000 30,000 Jan 7 Mistakes during installation 10.000 Exclude Jan 15 Testing 2 weeks 35,000 35,000 Memory upgrade 40.000 over 90-days Total Capitalized Cost: 837,000 Aug 1 9.03 Calculate capitalized cost for basis of deprecation for Items below: Truck purchased, upgraded and placed in service Sep 10: Date Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 5 Dec 1 Description Amount Include Notes Purchase of Truck 20,000 20.000 Freight 500 500 Sales Tax 1500 1 500 License Plates 360 Exclude-Recurrent Llability Insurance 900 Exclude-Recurrent Collision insurance 300 Exclude Recurrent Hydraulic Lift 5000 5.000 Special Paint 1000 1.000 Total Capitalized Cost: 28,000 Building purchased June 1, upgraded and placed in service August 1: Notes Notincludable not includable Date June 1 June 1 June 1 June 1 June 1 June 15 July 1 Nov 10 Description Purchase of Building Land Vandalism Title fees Real Property Taxes (County) Pave parking lot Outdoor lighting Fences Total Capitalized Cost: Amount Include 600,000 600,000 200.000 12000 1,500 1,500 6,000 40,000 40.000 30,000 30.000 20,000 671,500 Exclude-recurrent over 90 days Main Frame computer purchased Jan 1. placed in service Feb 1: Date Description Amount Include Notes Jan 2 Raised flooring 40,000 40,000 Jan 2 Air Conditioning 25,000 25,000 Jan 6 Purchase of computer 700,000 700,000 Jane Freight 7,000 7,000 Jan 7 Installation (1 week) 30,000 30,000 Jan 7 Mistakes during installation 10.000 Exclude Jan 15 Testing 2 weeks 35,000 35,000 Memory upgrade 40.000 over 90-days Total Capitalized Cost: 837,000 Aug 1