Depreciation Methods and Calculations: Analyzing Straight-Line, Double-Declining Balance, and Sum-of-the-Years' Digits Approaches

Comprehensive comparison of different depreciation calculation methods.

Benjamin Clark

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Depreciation Methods and Calculations: Analyzing Straight-Line, Double-Declining Balance,and Sum-of-the-Years' Digits ApproachesE11-5 (page 599)-Depreciation methods; solving for unknowns●LO2For each of the following depreciable assets, determine the missing amount (?). Abbreviations fordepreciation methods are SL for straight line, SYD for sum-of-the-years’ digits, and DDB for double-declining balance.Exercise 11-5Asset A:Straight-line rate is 20% (1÷5 years) x 2 = 40% DDB rate$24,000= $60,000 = Book value at the beginning of year 2.40Cost-(Cost x 40%) = $60,000.60Cost = $60,000Cost =$100,000Asset B:Sum-of-the-years’ digits is 36 {[8 (8 + 1)]÷2}($40,000-residual) x 7/36 = $7,000$280,000–7residual--------------------------= $7,00036$280,000-7residual = $252,0007residual =$28,000Residual=$4,000Asset C:$65,000-5,000= $6,000LifeLife =10 years

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