1 Determine the annual declining-balance depreciation rate to be used for each of the following:
a. 150% declining balance, 12-year life
b. 200% declining balance, 8-year life
c. 125% declining balance, 5-year life
d. 200% declining balance, 5-year life
2 What fraction is to be used each year for sum-of-the-years-digits depreciation for an asset with a useful life of 4 years?
3 For which depreciation method(s) is salvage value not subtracted to calculate depreciation?
4 Lopez Construction Company purchased construction equipment for $116,000 at the beginning of the year. Itis estimated that the equipment will have a useful life of 12 years and will have a scrap value of $8,000.
a. Calculate the annual depreciation if Lopez uses straight-line depreciation.
b. Calculate the book value of the equipment at the end of 5 years, assuming that Lopez uses straight-linedepreciation.
c. Compute the depreciation for the first year ending December 31 if Lopez purchased the equipment
d. Determine the depreciation per hour if Lopez uses the straight-line method based on 120,000 hours ofuseful life and an $8,000 scrap value.
e. Using the rate determined in (d), what is the depreciation for the year if the equipment is used for 2,360 hours?