Straight-Line, Declining-Balance, Sum-Of-The-Years'-Digits, and MACRS Methods A machine is purchased January 1 at a cost of $59,000. It is expected to serve for eight years and have a salvage value of $3,000. Required: 1. Prepare a schedule showing depreciation for each year and the book value at the end of each year using the following methods a. Straight-line
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.
Straight-Line, Declining-Balance, Sum-Of-The-Years'-Digits, and MACRS Methods
A machine is purchased January 1 at a cost of $59,000. It is expected to serve for eight years and have a salvage value of $3,000.
Required:
1. Prepare a schedule showing
a. Straight-line
![2. Assuming a seven-year class of property, compute MACRS depreciation expense for each
year of the asset's life. If required, round your Depreciation Rates and Depreciation Expense
answers to two decimal places. (Use Figure 18-3).
MACRS method
MACRS Depreciation
Depreciation
Year
Original Cost
Rates 7-Year
Expense
Class of Property
%
%
%
%
%
%
%
8
%
Total
$
3.
4.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc1addc0d-ad19-47e0-b731-19a33652960b%2Fb29d0b03-b13d-4faf-b509-ff40c4d1dd2a%2Fw3o622_processed.png&w=3840&q=75)
![Straight-Line Method
Year
Annual Depreciation Ending Book Value
2
4
5
6
8
b. Double-declining-balance (round to two decimal places)
Double-Declining-Balance Method
Year
Annual Depreciation Ending Book Value
2
3
4
6
7
8
c. Sum-of-the-years'-digits (round to two decimal places)
Sum-Of-The-Years'-Digits Method
Year
Annual Depreciation Ending Book Value
1
2
3
4
8](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc1addc0d-ad19-47e0-b731-19a33652960b%2Fb29d0b03-b13d-4faf-b509-ff40c4d1dd2a%2Fghklc96_processed.png&w=3840&q=75)
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