Partial period depreciation : Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used. To Calculate : Depreciation expense for 2016 and 2017 using straight line depreciation method.

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Answer 1

Question

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

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Answer 2

Question

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

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Answer 3

Question

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

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Answer 4

Question

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

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Answer 5

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

Answer 6

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

Answer 7

Chapter 11, Problem 11.3BE

(a)

To determine

Partial period depreciation:

Partial period depreciation is calculated when acquisition and disposal occur at different times in a fiscal year, a company must determine the depreciation, depletion, and amortization to record for the part of the year that each asset actually is used.

To Calculate: Depreciation expense for 2016 and 2017 using straight line depreciation method.

Answer 8

(a)

Expert Solution

Explanation of Solution

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset

Cost of the equipment is $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The annual depreciation is calculated as follows.

Depreciation expenses = (cost of the asset - salvage value)Estimated useful life of the asset= ($30,000 − $2000)4years= $28,0004= $7,000

Therefore the annual depreciation is $7,000

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 912= $5250

Therefore depreciation expense for 2016 under straight line method is $5250.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expense = Annual depreciation × Number of months used12 months= $7,000 × 1212= $7,000

Therefore depreciation expense for 2017 under straight line method is $7,000.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

Answer 13

(b)

To determine

To calculate: Depreciation expense for 2016 and 2017 using sum-of-the-years’-digits depreciation method.

Answer 14

(b)

Expert Solution

Explanation of Solution

Sum-of- the-years’ digits (SYD) method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Depreciation expense = {Cost of the asset × (Number of years ofestimated life remaining at the beginning of the year) ÷ SYD ×number of months used12monthsSYD = n(n+1)2

Where n is estimated life time of the asset.

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation expense= ($30,000 − $2,000) × 410 × 912= $28,000 ×36120=$8,400

Therefore depreciation expense for the year 2016 is $8,400.

Calculate depreciation for 2017:

In 2017, the equipment used for total 12 months that is January – December.

Therefore the depreciation for 2016 is as follows:

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation expense = [$28,000 × 410 × 312] = $2,800

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation expense = [$28,000 × 310 × 912] = $6,300

Depreciation for the year 2017 is as follows

Depreciation expense = (first 3 months) + (remaining 9 months)= $2,800+ $6,300= $9,100

Therefore depreciation expense for 2017 under sum-of-the years’ digits method is $9,100.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

Answer 15

(b)

Expert Solution

Answer 16

(b)

Expert Solution

Answer 17

Expert Solution

Answer 18

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.

Answer 19

(c)

To determine

To calculate: Depreciation expense for 2016 and 2017 using double-declining-balance (DDB) depreciation method.

Answer 20

(c)

Expert Solution

Explanation of Solution

Double declining balance (DDB) method:

In this method of depreciation, the depreciation is calculated by multiply beginning of year book value, not depreciable base, by an annual rate that is a multiple of the straight line rate.

Depreciation expense = [(Begining value of the asset) × (Straight line rate of depreciation × 2) × (Number of months used12 months)]

Calculate depreciation for 2016.

The equipment was purchased on March 31, 2016, that is in the year 2016 the equipment used only for 9 months (April - December).

Therefore the depreciation for 2016 is as follows:

Depreciation = $30,000 × (14 years)2 × (912)= $11,250

Therefore depreciation expense for 2016 is $11,250.

Calculate depreciation for 2017.

Depreciation expenses for 2017 1^st January to 31^st March (first 3 months)

Depreciation = [$30,000 × (14 years)2 × (312)] = $ 3,750

Depreciation expenses for 2017 1^st April to 31^st December (remaining 9 months)

Depreciation = [$30,000 − $15,000 × (14 years)2 × (912)] = $ 5,625

Depreciation for the year 2017 is as follows

depreciation expense = (first 3 months) + (remaining 9 months)= $3,750 + $5,625= $9,375

Therefore depreciation expense in the year 2017 is $9,375.

Equipment is purchased on 31^st March, 2016 useful life of the equipment is 4 years, that is till March 31st, 2020. Due to that for every year depreciation is calculated based on the useful life of the equipment, which is equipments 4 years life cycle.