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Assignment On Depreciation

The document contains 20 questions about calculating depreciation schedules for assets using different depreciation methods like straight-line, sum-of-years digits, reducing balance, and units of production. The questions provide cost and salvage value information for various assets and ask to compute annual depreciation charges, book values, and schedules using the specified depreciation methods over the assets' useful lives.

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Nouman Mujahid
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Download as DOCX, PDF, TXT or read online on Scribd
660 views

Assignment On Depreciation

The document contains 20 questions about calculating depreciation schedules for assets using different depreciation methods like straight-line, sum-of-years digits, reducing balance, and units of production. The questions provide cost and salvage value information for various assets and ask to compute annual depreciation charges, book values, and schedules using the specified depreciation methods over the assets' useful lives.

Uploaded by

Nouman Mujahid
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment on Depreciation

1. Some seed cleaning equipment was purchased in 2009 for $8,500 and is depreciated by
the reducing balance balance (DDB) method for an expected life of 12 years. What is the
book value of the equipment at the end of 2014? Original salvage value was estimated to
be $2,500 at the end of 12 years.

2. Suds-n-Dogs just purchased new automated wiener handling equipment for $12,000. The
salvage value of the equipment is anticipated to be $1,200 at the end of its five-year life.
Using Reducing balance method, Sum of the digit method determine the depreciation
schedule

3. An asset will cost $1,750 when purchased this year. It is further expected to have a
salvage value of $250 at the end of its five year depreciable life. Calculate complete
depreciation schedules giving the depreciation charge, D(n), and end-of-year book value,
B(n), for straight-line (SL), sum of the years digits (SOYD) and Reducing balance
method.

4. Your company is considering the purchase of a second-hand scanning microscope at a


cost of $10,500, with an estimated salvage value of $500 and a projected useful life of
four years. Determine the straight-line (SL), sum of years digits (SOYD), and Reducing
balance method depreciation schedules.

5. A piece of machinery costs $5,000 and has an anticipated $1,000 resale value at the end
of its five year useful life. Compute the depreciation schedule for the machinery by the
sum-of-years-digits method and Reducing balance method.

6. A new machine costs $12,000 and has a $1,200 salvage value after using it for eight
years. Prepare a year-by-year depreciation schedule by the Reducing balance method.

7. To meet increased sales, a large dairy is planning to purchase 10 new delivery trucks.
Each truck will cost $18,000. Compute the depreciation schedule for each truck, using the
Reducing balance method method, if the recovery period is 5 years.

8. Hoppy Hops, Inc. purchased hop harvesting machinery for $150,000 four years ago. Due
to a change in the method of harvesting the machine was recently sold for $37,500.
Determine the Reducing balance method deprecation schedule for the machinery for the
four years of ownership. Assume a five year property class. What is the recaptured
depreciation or loss on the sale of the machinery?

9. A used piece of depreciable property was bought for $20,000. If it has a useful life of 10
years and a salvage value of $5,000, how much will it be depreciated in the 9th year,
using Reducing balance method?

10. A front-end loader cost $70,000 and has a depreciable salvage value of $10,000 at the
end of its 5- year useful life. Compute the depreciation schedule and book value of the
tractor using Reducing balance method depreciation.

11. An asset is purchased for $100,000. The asset is depreciated using Reducing balance
method depreciation and a five year recovery period. At the end of the third year of use
the business changed its product mix and disposed of the asset. Calculate the book value
of asset after three years?

12. A pump cost $1,000 and has a salvage value of $100 after a life of five years. Using the
Reducing balance method depreciation method, determine: The depreciation in the first
year. b) The book value after five years. c) The book value after five years if the salvage
was only $50.

13. Two years ago Nuts-2-U Inc. purchased nut-cracking equipment at a total cost of
$80,000. The equipment was depreciated using Reducing balance method with a recovery
class of 3 years and an anticipated end of useful life value of $8,000. The company has
decided the equipment is no longer needed and wishes to determine the minimum value
they can accept for the equipment that will result in no loss on the sale. The minimum
selling price for the equipment is nearest to. a. $17,775 b. $24,000 c. $35,560 d. $40,000.

14. Adventure Airlines recently purchased a new baggage crusher for $50,000. It is expected
to last 14 years and has an estimated salvage value of $8,000. Determine the depreciation
charge on the crusher for the third year of its life and the book value at the end of 8 years,
using Reducing balance method depreciation.

15. In the production of beer, a final filtration is accomplished by the use of “Kieselguhr” or
diatomaceous earth, which is composed of the fossil remains of minute aquatic algae, a
few microns in diameter and composed of pure silica. A company has purchased a
property for $840,000 that contains an estimated 60,000 tons. Compute the depreciation
charges for the first three years, if a production (or extraction) of 3,000 tons, 5,000 tons,
and 6,000 tons are planned for years 1, 2, and 3, respectively., assuming no salvage value
for the property find the depreciation for respective years

16. Thick Trunk Sawmill purchases a new automated log planer for $95,000. The asset is
depreciated using straight-line depreciation over a useful life of 10 years to a salvage
value of $5,000. Find the depreciation

17. A fixed asset having a useful life of 3 years is purchased on 1 January 2013. Cost of the
asset is $2,000 whereas its residual value is expected to be $500. Determine the straight-
line (SL), sum of years digits (SOYD), and Reducing balance method depreciation
schedules.

18. Anil purchased a machine on 1 Apr 2015 for ₹400000. The useful life of the machine is 3
years and its estimated residual value is ₹40000. At the end of its useful life, the machine is
sold for 50000. Determine the straight-line (SL), sum of years digits (SOYD), and
Reducing balance method depreciation schedules.

19. M/s Cube textiles purchased machinery for ₹200000 on 1st January. It has an estimated


useful life of 10 years and an estimated residual value of ₹20000.  The firm sells the asset at
the residual value at the end of the 10th year. The machine has an expected production of
15000 units during its useful life. Now the production pattern is as follows:

Year Production

1-3 2000 units per


year

4-7 1500 units per year

8-10 1000 units per year

Calculate the amount of depreciation using the Units of Production Method.

20. A non-current asset cost Rs. 64,000. It is depreciated by the reducing balance method, at the
rate of 25% each year. What is the annual depreciation charge in Year 1, Year 2 and Year 3?
4 A motor vehicle cost Rs.400,000. It has an expected residual value after 5 years of
Rs.40,000.What will be the annual charge for depreciation each year if the sumof- the-digits
method of depreciation is used? What will be the carrying amount of the asset at the end of
Year 2?

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