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CHAP 9 -DEPRECIATION WORKSHEET

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									                      Chapter 9 - DEPRECIATION WORKSHEET

Asset: Truck purchased for $30,000. Estimated life is 5 years, with $5,000 salvage
value.

1. Straight line method




2. Units of Production Method – truck expected to be driven a total of 125,000 miles
over its useful life.

Year        Miles driven        Calculations                        Depreciation Exp.

1           22,000

2           30,000

3           25,000

4           28,000

5           20,000

Total       125,000                                                 $25,000
3. Double declining balance

Straight line percentage for 5 years = 20% per year. Double = _____%

Apply percentage to NET BOOK VALUE. Ignore salvage value in annual calculation!!


Year          Net book value x %            Depreciation expense       Net book value

1                           x 40%

2                           x 40%

3                           x 40%

4                           x 40%

5
Total                                               $25,000

Change in Estimates
Suppose that after three years of straight-line depreciation, you determine that the truck
will last 6 years instead of 5 years, but its salvage will only be $3,000. Determine the
amount of depreciation to record in each year, beginning with year 4.
Disposal

Assume instead that after 3-1/2 years, you dispose of truck.

FIRST, must adjust depreciation through the date of disposal:




Net book value of truck is now $________________



   a) Truck is “junked”




   b) Truck is sold for $10,000




   c) Truck is sold for $13,700

								
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