**Depreciation Calculation for Salvage Value**To accurately compute the depreciation of an asset, it is crucial to determine the salvage value. ---**Input Required:**- **Salvage Value:** Please enter the monetary amount used as the salvage value in the depreciation calculations for this specific asset. (Input field for the dollar amount)---*Understanding the salvage value helps in evaluating the remaining value of an asset at the end of its useful life. This figure is subtracted from the initial cost of the asset to calculate the total depreciation over time.* **Depreciation Methods Comparison for Asset Valuation****Context:**Sunland Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. To evaluate the asset's depreciation, an employee prepared schedules using three distinct methods: Straight-Line, Sum-of-the-Years'-Digits, and Double-Declining-Balance. These schedules were created to contrast the results of each method. Below are the detailed schedules for the asset's depreciation using these methods.**Depreciation Schedules:**| Year | Straight-Line | Sum-of-the-Years'-Digits | Double-Declining-Balance ||------|---------------|--------------------------|--------------------------|| 1 | $11,340 | $18,900 | $25,200 || 2 | $11,340 | $15,120 | $15,120 || 3 | $11,340 | $11,340 | $9,072 || 4 | $11,340 | $7,560 | $5,443 || 5 | $11,340 | $3,780 | $1,865 || **Total** | **$56,700** | **$56,700** | **$56,700** |**Explanation:**- **Straight-Line Method** distributes depreciation evenly across each of the 5 years, resulting in an annual depreciation of $11,340.- **Sum-of-the-Years'-Digits Method** accelerates depreciation in the earlier years. Year 1 has the highest depreciation of $18,900, decreasing annually until Year 5, which has the lowest at $3,780.- **Double-Declining-Balance Method** also accelerates depreciation more in the early years. Year 1 reflects a depreciation of $25,200, and it decreases annually, ending with $1,865 in Year 5.Each method results in a total depreciation of $56,700 over the 5-year period. The choice of method affects the asset's book value and reported earnings annually.

Name: **Depreciation Calculation for Salvage Value**To accurately compute t
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Description: **Depreciation Calculation for Salvage Value**To accurately compute the depreciation of an asset, it is crucial to determine the salvage value. ---**Input Required:**- **Salvage Value:** Please enter the monetary amount used as the salvage value

The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage and the passage of time. Depreciable cost = $56,700 Double declining Depreciation rate = 2 * 1/5 * 100 = 40% Depreciation expense for year 1 (using double declining balance method) = $25,200 Cost price of plant asset = 25,200 / 40% = $63,000 Salvage value = 63,000 - 56,700 = $6,300

Business

Accounting

Sunland Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with th results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Sum-of-the- Double-Declining- Year Straight-Line Years'-Digits Balance 1 $ 11,340 $ 18,900 $ 25,200 2 11,340 15,120 15,120 3 11,340 11,340 9,072 4 11,340 7,560 5,443 11,340 3,780 1,865 * E4 700

Sunland Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with th results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Sum-of-the- Double-Declining- Year Straight-Line Years'-Digits Balance 1 $ 11,340 $ 18,900 $ 25,200 2 11,340 15,120 15,120 3 11,340 11,340 9,072 4 11,340 7,560 5,443 11,340 3,780 1,865 * E4 700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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