Billings Corporation purchased a wood pulp mixer for $17,400. Delivery costs totaled $464. The useful is 7 years, and the salvage value Prepare a depreciation schedule using the sum-of-the-years' digits method. Billings Corporation SYD Depreciation Schedule-Wood Pulp Mixer Year Total Depreciation ($)x Depreciation Rate Fraction = Annual Depreciation ($) Accumulated Depreciation ($) 1 2 3 4 5 6 7 $10004 $10004 $10004 $ 10004 $10004 $10004 $10004 ✔ ✔ ✔ ✓ ✓ X x x x x 7/28 6/28 5/28 4/28 3/28 2/28 1/28 ✔ ✔ > > > = = = = $4151 $ 3573 $ 2005 $2417 $1770 $ 1180 $ 503 ✔ x x x ✔ ✔ $4151 $7724 $ 10719 $13136 $ 14015 $ 10101 $10004 x x x x x x Book Value ($) $13713 $0880 $6885 $ 4408 $2680 $1503 $17,864 (new) 1✔ $910 x x x x x x
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.
Sum of Years Digit Method of Depreciation: Under this method of depreciation, the book value of the company's assets declines at an accelerated rate. In this method, it is presumed that most of the depreciation expense related to the asset is recorded in its initial few years of its useful life only. Under this method of the book value of the company's at an accelerated rate. In this method, it is that most of the depreciation expense related to the asset is recorded in its initial few years of its useful life only.
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