Straight-Line, Declining-Balance, Sum-Of-The-Years'-Digits, and MACRS Methods

A machine is purchased January 1 at a cost of $63,900. It is expected to serve for eight years and have a salvage value of $2,900.

Required:

1. Prepare a schedule showing depreciation for each of the eight years and the book value at the end of each year using the following methods:

a. Straight-line

Straight-Line Method
Year	Annual Depreciation	Ending Book Value
1	$fill in the blank ec14f3fe1fe2018_1	$fill in the blank ec14f3fe1fe2018_2
2	fill in the blank ec14f3fe1fe2018_3	fill in the blank ec14f3fe1fe2018_4
3	fill in the blank ec14f3fe1fe2018_5	fill in the blank ec14f3fe1fe2018_6
4	fill in the blank ec14f3fe1fe2018_7	fill in the blank ec14f3fe1fe2018_8
5	fill in the blank ec14f3fe1fe2018_9	fill in the blank ec14f3fe1fe2018_10
6	fill in the blank ec14f3fe1fe2018_11	fill in the blank ec14f3fe1fe2018_12
7	fill in the blank ec14f3fe1fe2018_13	fill in the blank ec14f3fe1fe2018_14
8	fill in the blank ec14f3fe1fe2018_15	fill in the blank ec14f3fe1fe2018_16

Feedback

Straight-line method: (Cost Salvage Value) / Years of Life = Annual Depreciation

Ending book value is Cost less Accumulated Depreciation and the amount cannot be reduced by more than the salvage value.

b. Double-declining-balance (round to two decimal places)

Double-Declining-Balance Method
Year	Annual Depreciation	Ending Book Value
1	$fill in the blank 9cd4c4004036003_1	$fill in the blank 9cd4c4004036003_2
2	fill in the blank 9cd4c4004036003_3	fill in the blank 9cd4c4004036003_4
3	fill in the blank 9cd4c4004036003_5	fill in the blank 9cd4c4004036003_6
4	fill in the blank 9cd4c4004036003_7	fill in the blank 9cd4c4004036003_8
5	fill in the blank 9cd4c4004036003_9	fill in the blank 9cd4c4004036003_10
6	fill in the blank 9cd4c4004036003_11	fill in the blank 9cd4c4004036003_12
7	fill in the blank 9cd4c4004036003_13	fill in the blank 9cd4c4004036003_14
8	fill in the blank 9cd4c4004036003_15	fill in the blank 9cd4c4004036003_16

Feedback

Double-declining-balance method: Depreciation Rate (100% / life x 2) Book Value = Annual Depreciation

Double-declining-balance is double the rate of the straight-line method. Salvage value is not considered.

Ending book value is Cost less Accumulated Depreciation and the amount cannot be reduced by more than the salvage value.

c. Sum-of-the-years'-digits (round to two decimal places)

Sum-Of-The-Years'-Digits Method
Year	Annual Depreciation	Ending Book Value
1	$fill in the blank 90df5705dff900d_1	$fill in the blank 90df5705dff900d_2
2	fill in the blank 90df5705dff900d_3	fill in the blank 90df5705dff900d_4
3	fill in the blank 90df5705dff900d_5	fill in the blank 90df5705dff900d_6
4	fill in the blank 90df5705dff900d_7	fill in the blank 90df5705dff900d_8
5	fill in the blank 90df5705dff900d_9	fill in the blank 90df5705dff900d_10
6	fill in the blank 90df5705dff900d_11	fill in the blank 90df5705dff900d_12
7	fill in the blank 90df5705dff900d_13	fill in the blank 90df5705dff900d_14
8	fill in the blank 90df5705dff900d_15	fill in the blank 90df5705dff900d_16

Feedback

Sum-of-the-years'-digits method: (Cost Salvage Value) x Factor = Depreciation Expense

Factor:

Remaining life from beginning of year

Sum-of-the-years

Ending book value is Cost less Accumulated Depreciation and the amount cannot be reduced by more than the salvage value.

2. Assuming a seven-year class of property, compute MACRS depreciation expense for each year of the assets life.

MACRS method
Year	Original Cost	MACRS Depreciation Rates 7-Year Class of Property	Depreciation Expense
1	$63,900	14.29%	$fill in the blank cb36b0fa3fe6f9c_1
2	63,900	24.49%	fill in the blank cb36b0fa3fe6f9c_2
3	63,900	17.49%	fill in the blank cb36b0fa3fe6f9c_3
4	63,900	12.49%	fill in the blank cb36b0fa3fe6f9c_4
5	63,900	8.93%	fill in the blank cb36b0fa3fe6f9c_5
6	63,900	8.92%	fill in the blank cb36b0fa3fe6f9c_6
7	63,900	8.93%	fill in the blank cb36b0fa3fe6f9c_7
8	63,900	4.46%	fill in the blank cb36b0fa3fe6f9c_8
Total			$fill in the blank cb36b0fa3fe6f9c_9