Depreciation Methods Sayers Company purchased a building for $250,000 on January 2, 2019. The building has an expected residual value of $20,000 at the end of its expected life of 20 years. Required: 1 a. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for straight-line method. If required, round your answers to the nearest dollar. SAYERS COMPANY Depreciation Schedule Straight-line Beginning Book Value Depreciation Ending Book Value 2019 $ $11500 $ 2020 $ $ $ b. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for sum-of-the-years'-digits method. If required, round your answers to the nearest dollar. SAYERS COMPANY Depreciation Schedule Sum-of-the-years'-digits method Beginning Book Value Depreciation Ending Book Value 2019 $ $ $ 2020 $ $ $ c. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for double-declining-balance method. If required, round your answers to the nearest dollar. SAYERS COMPANY Depreciation Schedule Double-declining-balance Beginning Book Value Depreciation Ending Book Value 2019 $ $ $ 2020 $ $ $ d. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for 150%-declining-balance method. If required, round your answers to the nearest dollar. SAYERS COMPANY Depreciation Schedule 150%-declining-balance Beginning Book Value Depreciation Ending Book Value 2019 $ $ $ 2020 $ $ $ 2. Holding all other things equal, the recording of depreciation causes the rate of return on total assets to increase decrease increase remain the same each year because the book value of the property, plant, and equipment increases decreases increases remains the same each year.
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.
Sayers Company purchased a building for $250,000 on January 2, 2019. The building has an expected residual value of $20,000 at the end of its expected life of 20 years.
Required:
1 a. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for straight-line method. If required, round your answers to the nearest dollar.
| SAYERS COMPANY | |||
| Depreciation Schedule | |||
| Straight-line | |||
| Beginning Book Value | Depreciation | Ending Book Value | |
| 2019 | $ | $11500 | $ |
| 2020 | $ | $ | $ |
b. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for sum-of-the-years'-digits method. If required, round your answers to the nearest dollar.
| SAYERS COMPANY | |||
| Depreciation Schedule | |||
| Sum-of-the-years'-digits method | |||
| Beginning Book Value | Depreciation | Ending Book Value | |
| 2019 | $ | $ | $ |
| 2020 | $ | $ | $ |
c. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for double-declining-balance method. If required, round your answers to the nearest dollar.
| SAYERS COMPANY | |||
| Depreciation Schedule | |||
| Double-declining-balance | |||
| Beginning Book Value | Depreciation | Ending Book Value | |
| 2019 | $ | $ | $ |
| 2020 | $ | $ | $ |
d. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value on December 31, 2019, and December 31, 2020, for 150%-declining-balance method. If required, round your answers to the nearest dollar.
| SAYERS COMPANY | |||
| Depreciation Schedule | |||
| 150%-declining-balance | |||
| Beginning Book Value | Depreciation | Ending Book Value | |
| 2019 | $ | $ | $ |
| 2020 | $ | $ | $ |
- decrease
- increase
- remain the same
- decreases
- increases
- remains the same
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