Answer:
A.
Depreciation expense each of the three years would be $60,000
Book value at the end of year 1 = $140,000
Book value at the end of year 2 =$80,000
Book value at the end of year 3 = $20,000
B.
Depreciation expense in year 1 =$90,000
Depreciation expense in year 2 =$60,000
Depreciation expense in year 3 =$30,000
Book value at the end of year 1 =$110,000
Book value at the end of year 2 = $50,000
Book value at the end of year 3 = $20,000
C.
Depreciation expense in year 1 = $133,333.33
Book value at the end of year 1 = $66,666.67
Depreciation expense in year 2 = $44,444.45
Book value at the end of year 2 = $22,222.22
Depreciation expense in year 3 = $14,814.16
Book value at the end of year 3 = $7,407.40
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($200,000 - $20,000) / 3 = $60,000
Depreciation expense each of the three years would be $60,000
Book value at the end of year 1 = $200,000 - $60,000 = $140,000
Book value at the end of year 2 = $140,000 - $60,000 = $80,000
Book value at the end of year 3 = $80,000 - $60,000 = $20,000
Sum-of-the-year digits = (remaining useful life / sum of the years ) x (Cost of asset - Salvage value)
Sum of the years = 1 + 2 + 3 = 6 years
Depreciation expense in year 1 = (3/6) x ($200,000 - $20,000) = $90,000
Depreciation expense in year 2 = (2/6) x ($200,000 - $20,000) = $60,000
Depreciation expense in year 3 = (1/6) x ($200,000 - $20,000) = $30,000
Book value at the end of year 1 = $200,000 - $90,000 = $110,000
Book value at the end of year 2 = $110,000 - $60,000 = $50,000
Book value at the end of year 3 = $50,000 - $30,000 = $20,000
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2/3
Depreciation expense in year 1 = (2/3) x $200,000 = $133,333.33
Book value at the end of year 1 = $200,000 - $133,333.33 = $66,666.67
Depreciation expense in year 2 = (2/3) x $66,666.67 = $44,444.45
Book value at the end of year 2 = $66,666.67 - $44,444.45= $22,222.22
Depreciation expense in year 3 = (2/3) x$22,222.22 = $14,814.16
Book value at the end of year 3 =$22,222.22 - $14,814.16 = $7,407.40
