The York City Hospital has just acquired new equipment. The equipment cost $4,250,000, and the organization spent $135,000 on upgrading the physical plant the new equipment will be located in. The equipment is expected to have a 10-year useful life and a salvage value of 10% (i. e., $425,000). Calculate the first 5 years of depreciation, using SL, DDB, and SYD.

Question

Business

Jaydon Fox

9 June, 14:05

The York City Hospital has just acquired new equipment. The equipment cost $4,250,000, and the organization spent $135,000 on upgrading the physical plant the new equipment will be located in. The equipment is expected to have a 10-year useful life and a salvage value of 10% (i. e., $425,000). Calculate the first 5 years of depreciation, using SL, DDB, and SYD.

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Gibbs · Answer 1

Depreciation Straight Line Method = Acquisition Cost - Salvage Value / Useful Life

Depreciation Straight Line Method = $ 4250000 + $ 135,000 - 425,000 / 10

Depreciation Straight Line Method = 4385,000 - 425,000/10 = 3960,000/10=

Depreciation Straight Line Method = $396,000

Straight Line Rate = 100% / useful Life = 100%/10 = 10%

Double Declining Method = 2 * Straight Line Rate

Double Declining Method = 2 * Straight Line Rate = 2*10% = 20%

Year Book Value Dep Rate Dep Expense Accu. Dep. Book Value

1 4385,000 20% $ 877,000 877,000 3508,000

2 3508,000 20% 701,600 1578,600 2806,400

3 2806,000 20% 561,280 2139,880 2245,120

4 2245,120 20% 449,024 2588,904 1796,096

5 1796,096 20% 359, 219.2 2948,123 1409,876

Sum of Year Digits Method Depreciation

10+9+8+7+6 = 40

Year Depreciation Remaining Dep Dep. Ex. Bk Value

Base Life Fraction

1 4385,000 10 10/40 1096250 3288750

2 4385,000 9 9/40 986,625 2302125

3 4385,000 8 8/40 877,000 1425,125

4 4385,000 7 7/40 767,375 657,750

5 4385,000 6 6/40 657,750 Zero