Answer to Question #193840 in Financial Math for King

Question

Construct a depreciation. Schedule for the following problems.

1.) The Dwight laundry purchased new washing machines and dryers for ₱570,000.Freight charges were ₱47,000 and installation amounted to ₱50,000.The machines are expected to last five years and have a salvage value or scrap value ,₱20,000. If Dwight elects to use the straight-line method of depreciation, prepare a depreciation schedule for these machines .

Answer 1

Total cost = cost + shipping charges + installation charges

= 570,000 + 47,000 + 50,000

= 667,000

Total depreciation = Total cost – Salvage value

= 667,000 – 20,000

= 647,000

Annual depreciation $= \frac{Total \; depreciation}{Number \;of\; useful \;years}$

$= \frac{647,000}{5}$

= 129,400

Original book value = 667,000

At the end of the 1^st year

Annual depreciation = 129,400

Accumulated depreciation = 129,400

Book value (at the end of the 1^st year)

= Original book value – Annual depreciation

= 667,000 – 129,400

= 537,600

At the end of the 2^nd year

Annual depreciation = 129,400

Accumulated depreciation = Annual depreciation $\times 2$

= 129,400 $\times 2$

= 258,800

Book value (at the end of the 2^nd year)

= Book value (at the end of the 1^st year) – Annual depreciation

= 537,600 – 129,400

= 408,200

At the end of the 3^rd year

Annual depreciation = 129,400

Accumulated depreciation = Annual depreciation $\times 3$

= 129,400 $\times 3$

= 388,200

Book value (at the end of the 3^rd year)

= Book value (at the end of the 2^nd year) – Annual depreciation

= 408,200 – 129,400

= 278,800

At the end of the 4^th year

Annual depreciation = 129,400

Accumulated depreciation = Annual depreciation $\times 4$

= 129,400 $\times 4$

= 517,600

Book value (at the end of the 4^th year)

= Book value (at the end of the 3^nd year) – Annual depreciation

= 278,800 – 129,400

= 149,400

At the end of the 5^th year

Annual depreciation = 129,400

Accumulated depreciation = Annual depreciation $\times 5$

= 129,400 $\times 5$

= 647,000

Book value (at the end of the 5^th year)

= Book value (at the end of the 4^nd year) – Annual depreciation

= 149,400 – 129,400

= 20,000