(Depreciation Computations—SYD, DDB—Partial Periods) Bonds Company purchased a new plant asset on April 1, 2020, at a cost of $355,500. It was estimated to have a service life of 20 years and a salvage value of $30,000. Bonds’s accounting period is the calendar year. Instructions: Compute the depreciation for this asset for 2020, 2021, and 2022 using the sum-of-the-years’-digits method. Compute the depreciation for this asset for 2020, 2021, and 2022 using the double-declining balance method. Compute the depreciation for this asset for 2020, 2021, and 2022 using the straight line method.
(Depreciation Computations—SYD, DDB—Partial Periods) Bonds Company purchased a new plant asset on April 1, 2020, at a cost of $355,500. It was estimated to have a service life of 20 years and a salvage value of $30,000. Bonds’s accounting period is the calendar year. Instructions: Compute the depreciation for this asset for 2020, 2021, and 2022 using the sum-of-the-years’-digits method. Compute the depreciation for this asset for 2020, 2021, and 2022 using the double-declining balance method. Compute the depreciation for this asset for 2020, 2021, and 2022 using the straight line method.
Chapter1: Financial Statements And Business Decisions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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(Depreciation Computations—SYD, DDB—Partial Periods) Bonds Company purchased a new plant asset on April 1, 2020, at a cost of $355,500. It was estimated to have a service life of 20 years and a salvage value of $30,000. Bonds’s accounting period is the calendar year.
Instructions:
Compute the depreciation for this asset for 2020, 2021, and 2022 using the sum-of-the-years’-digits method.
Compute the depreciation for this asset for 2020, 2021, and 2022 using the double-declining balance method.
Compute the depreciation for this asset for 2020, 2021, and 2022 using the straight line method .
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