A surface mount PCB placement/
A surface mount PCB placement/soldering line is to be installedfor $1,300,000. It will have a salvage value of $150,000 after 5years. Determine the depreciation deduction and the resultingunrecovered investment during each year of the asset’s life.Click here to access the MACRS-GDS Table Calculator
Part a
Determine the depreciation deduction and the resultingunrecovered investment during each year of the asset’s life usingdeclining balance depreciation using double declining balancedepreciation.
| EOY | Depreciation | Balance | |||
|---|---|---|---|---|---|
|
0 |
enter a dollar amount | enter a dollar amount | |||
|
1 |
enter a dollar amount | enter a dollar amount | |||
|
2 |
enter a dollar amount | enter a dollar amount | |||
|
3 |
enter a dollar amount | enter a dollar amount | |||
|
4 |
enter a dollar amount | enter a dollar amount | |||
|
5 |
enter a dollar amount | enter a dollar amount | |||
|
Sum depreciation |
enter a total amount |
Round entry to 0 decimal places. The tolerance is±10.
Answer:
A surface mount PCBplacement/soldering line is to be installed for $1,300,000. It willhave a salvage value of $150,000 after 5 years. Determine thedepreciation deduction and the resulting unrecovered investmentduring each year of the asset’s life.
.
Parta
Determinethe depreciation deduction and the resulting unrecovered investmentduring each year of the asset’s life using declining balancedepreciation using double declining balancedepreciation.
.
|
EOY |
Depreciation |
Balance |
|
0 |
0 |
1300000 |
|
1 |
520000 |
780000 |
|
2 |
312000 |
468000 |
|
3 |
187200 |
280800 |
|
4 |
112320 |
168480 |
|
5 |
18480 |
150000 |
|
|
1150000 |
|
.
Cost = $1300000
Salvage value = 150000
Useful life = 5 years
Method = double decline method
double decline percentage =straight line % * 2
straight line % = 100 / 5 =20%
double decline percentage = 20 * 2= 40%
1st year end = 1300000 * 40% =520000
2nd year= 780000 * 40% = 312000
3rd year= 468000 * 40% = 187200
4th year= 280800 * 40% = 112320
5th year= 168480 – 150000 = 18480
.
Double decline balancemethod:
Under this method we used adepreciation rate that is two time the percent that would recognizeunder straight line dep. Method.
.
Salvage value is not taken in to account whencalculating the annual dep. Charge.However near the end of the assets useful life, we need to pay theattention on the salvage value to make certain that we don’tdepreciate assets below its salvage value.
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