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Expert-verified Found in: Page 586 ### Intermediate Accounting (Kieso)

Book edition 16th
Author(s) Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Pages 1552 pages
ISBN 9781118743201

# (Different Methods of Depreciation) Jackel Industries presents you with the following information.DescriptionDate Purchased CostSalvage ValueLife in yearsDepreciation MethodAccumulated depreciation to 12/31/18Depreciation for 2019Machine A2/12/17$142,500$16,00010(a)$33,350(b)Machine B8/15/16(c)21,0005SL29,000(d)Machine C7/21/1575,40023,5008DDB(e)(f)Machine D10/12/(g)219,00069,0005SYD70,000(h)Instructions Complete the table for the year ended December 31, 2019. The company depreciates all assets using the half-year convention. Answer Depreciation for 2019 is as follows: 1.$19,550
2. $11,600 3.$4,333
4. $35,000 See the step by step solution ### Step by Step Solution ## Step-by-Step SolutionStep 1: Meaning of Depreciation In financial accounting, depreciation could be a strategy for spreading out the cost of tangible resources over their functional lives. Essentially, it is the disintegration of the value of an asset, which happens over time due to continuous use and abrasion of the asset. ## Step 2: Computing the table for the year ended December 31, 2019  Description Date Purchased Cost Salvage Value Life in years Depreciation Method Accumulated depreciation to 12/31/18 Depreciation for 2019 Machine A 2/12/17$142,500 $16,000 10 SYD$33,350 (b) $19,550 Machine B 8/15/16 (c) 21,000 5 SL 29,000 (d) 11,600 Machine C 7/21/15 75,400 23,500 8 DDB (e) 47,567 (f) 4,333 Machine D 10/12/17(g) 219,000 69,000 5 SYD 70,000 (h) 35,000 Working notes:  Machine A—Testing the methods Straight-Line Method for 2017$ 6,325 Straight-Line Method for 2018 $12,650 Total Straight Line$18,975 Machine A—Testing the methods Double-Declining Balance for 2017 $14,250 Double-Declining Balance for 2018$25,650 Total Double Declining Balance $39,900 Computing depreciation for 2017 Calculating depreciation for 2018 Machine A—Testing the methods Sum-of-the-years-digits for 2017$11,500 Sum-of-the-years-digits for 2018 $21,850 Total Sum-of-the-years-digits$33,350

Calculating depreciation for 2017 Calculating depreciation for 2018 for life in 10 year Calculating depreciation for 2018 for life in 9 year So total depreciation for 2018 is $21,850 ($14,833+$21,191)  Machine A—Testing the methods The method used must be SYD Using SYD, 2019 Depreciation is$19,550

Calculation of depreciation for life in 9 year Calculation of depreciation for life in 8 year So total depreciation is $19,500 ($10,350+$9,200) Machine B-Computation of the cost The asset has been depreciated for 21/2 years using the straight-line method. Annual depreciation is then equal to$29,000 divided by 2.5 or $11,600. 11,600 times 5 plus the salvage value is equal to the cost. Cost is$79,000 Using SL, 2017 Depreciation is $11,600 Machine C—using the double-declining balance method of depreciation  Year Depreciation expense Calculation 2015’s depreciation is$ 9,425 ($75400 x .25 x 5) 2016’s depreciation is$16,494 ($75400 -$9,425) x .25 2017’s depreciation is $12,370 ($75400 - $25,919) x .25 2018’s depreciation is$ 9,278 ($75400 -$38,289) x .25 $47,567 So, Using DDB, 2019 Depreciation is$4,333 ($75,400 –$47,567 – $23,500) Machine D—Computation of Year Purchased  First Half Year using SYD$25,000 Second Year using SYD $45,000$70,000

Calculating depreciation for the first half-year using SYD Calculating depreciation for Second Year using SYD for 5 years in life Calculating depreciation for Second Year using SYD for 4 years in life So, the total depreciation expense is $70,000 Thus the asset must have been purchased on October 12, 2017 Using SYD, 2019 Depreciation is$35,000

Calculating depreciation for 4 years in the life Calculating depreciation for 3 years in the life ## Recommended explanations on Business-studies Textbooks

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