Problem 1: On July 1, 2006, Nyland Company purchased for $2,160,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $90,000. Depreciation is taken for the portion of the year the asset is used.
Determine the depreciation expense and year-end book values for 2006 and 2007 using the
Sum-of-the-years'-digits method.
Double-declining balance method.
Sum-of-the-Years'-Digits Method 2006 2007
Equipment $2,160,000 $2,160,000
Less: Accumulated Depreciation ? ?
Year-End book Value ? ?
Depreciation Expense for the Year ? ?
Double-Declining Balance Method
Equipment $2,160,000 $2,160,000
Less: Accumulated Depreciation ? ?
Year-End Book Value ? ?
Depreciation Expense for the Year ? ?
Problem 2:
This same company using the straight-line depreciation during 2006 and 2007. During 2008, the company determined that the equipment would be useful to the company for only one more year beyond 2008. Salvage value is estimated at $120,000. Calculate the amount of depreciation expense for the 2008 income statement.