【正文】 8 , 4 0 0 1 5 , 6 0 0 2022 4 , 2 0 0 4 , 2 0 0 1 2 , 6 0 0 1 1 , 4 0 0 2022 4 , 2 0 0 4 , 2 0 0 1 6 , 8 0 0 7 , 2 0 0 2022 4 , 2 0 0 4 , 2 0 0 2 1 , 0 0 0 3 , 0 0 0 2 1 , 0 0 0$ 2 1 , 0 0 0$ Salvage Value ?The McGrawHill Companies, Inc., 1999 Slide 921 Irwin/McGrawHill StraightLine Method Graph of Depreciation Expense $0$ 1 ,0 0 0$ 2 ,0 0 0$ 3 ,0 0 0$ 4 ,0 0 0$ 5 ,0 0 01997 1998 1999 2022 2022 2022Fo r th e y e a r e nd e d De c e m be r 3 1Depreciation?The McGrawHill Companies, Inc., 1999 Slide 922 Irwin/McGrawHill Depreciation for Fractional Periods When an asset is acquired during the year, depreciation in the year of acquisition must be prorated. HalfYear Convention In the year of acquisition, record six months of depreciation. ?The McGrawHill Companies, Inc., 1999 Slide 923 Irwin/McGrawHill Using the halfyear convention, calculate the straightline depreciation on December 31, 1999, for equipment purchased in 1999. The equipment cost $75,000, has a useful life of 10 years and an estimated salvage value of $5,000. HalfYear Convention Example ?The McGrawHill Companies, Inc., 1999 Slide 924 Irwin/McGrawHill Depreciation = ($75,000 $5,000) ?10 = $7,000 for a full year Depreciation = $7,000 ? 1/2 = $3,500 Using the halfyear convention, calculate the straightline depreciation on December 31, 1999, for equipment purchased in 1999. The equipment cost $75,000, has a useful life of 10 years and an estimated salvage value of $5,000. HalfYear Convention Example ?The McGrawHill Companies, Inc., 1999 Slide 925 Irwin/McGrawHill DecliningBalance Method Depreciation in the early years of an asset’s estimated useful life is higher than in later years. D e pr e c i a t i on E x pe ns e =R e m a i ni ng B oo k V a l ueA c c e l e r a t e d D e pr e c i a t i on R a t eThe doubledeclining balance accelerated depreciation rate is 200% of the straightline depreciation rate of 1/Useful Life. ?The McGrawHill Companies, Inc., 1999 Slide 926 Irwin/McGrawHill DoubleDeclining Balance Example On January 1, 1998, Bass Co. buys a new boat. Bass Co. pays $24,000 for the boat. The boat has an estimated residual value of $3,000 and an estimated useful life of 5 years. Compute depreciation for 1998 using the doubledeclining balance method. ?The McGrawHill Companies, Inc., 1999 Slide 927 Irwin/McGrawHill DoubleDeclining Balance Example On January 1, 1998, Bass Co. buys a new boat. Bass Co. pays $24,000 for the boat. The boat has an estimated residual value of $3,000 and an estimated useful life of 5 years. Compute depreciation for 1998 using the doubledeclining balance method. 1 9 9 8 D e p r . E x p e n s e =R e m a i n i n g B o o k V a l u eA c c e l e r a t e d D e p r e c i a t i o n R a t e = 2 4 , 0 0 0$ 2 ? 1/ 5 = 2 4 , 0 0 0$ 40% = 9 , 6 0 0$ ?The McGrawHill Companies, Inc., 1999 Slide 928 Irwin/McGrawHill DoubleDeclining Balance Example Compute depreciation for the rest of the boat抯 estimated useful life. Y e a r C o m p u t a t i o nD e p r . E x p e n s eA c c u m u l a t e d D e p r e c i a t i o nB o o k V a l u e1998 2 4 , 0 0 0$ 40% 9 , 6 0 0$ 9 , 6 0 0$ 1 4 , 4 0 0$ 1999 1 4 , 4 0 0$ 40% 5 , 7 6 0$ 1 5 , 3 6 0$ 8 , 6 4 0$ 2022 8 , 6 4 0$ 40% 3 , 4 5 6$ 1 8 , 8 1 6$ 5 , 1 8 4$ 2022 5 , 1 8 4$ 40% 2 , 0 7 4$ 2 0 , 8 9 0$ 3 , 1 1 0$ 2022 110$ 2 1 , 0 0 0$ 3 , 0 0 0$ T o t a l D e p r e c i a t i o n 2 1 , 0 0 0$ P l u g y e a r 5?The McGrawHill Companies, Inc., 1999 Slide 929 Irwin/McGrawHill DoubleDeclining Balance Example Y e a r C o m p u t a t i o nD e p r . E x p e n s eA c c u m u l a t e d D e p r e c i a t i o nB o o k V a l u e1998 2 4 , 0 0 0$ 40% 9 , 6 0 0$ 9 , 6 0 0$ 1 4 , 4 0 0$ 1999 1 4 , 4 0 0$ 40% 5 , 7 6 0$ 1 5 , 3 6 0$ 8 , 6 4 0$ 2022 8 , 6 4 0$ 40% 3 , 4 5 6$ 1 8 , 8 1 6$ 5 , 1 8 4$ 2022 5 , 1 8 4$ 40% 2 , 0 7 4$ 2 0 , 8 9 0$ 3 , 1 1 0$ 2022 110$ 2 1 , 0 0 0$ 3 , 0 0 0$ T o t a l D e p r e c i a t i o n 2 1 , 0 0 0$ P l u g y e a r 5Total depreciation over the estimated useful life of an asset is the same using either the straightline method or the decliningbalance method. ?The McGrawHill Companies, Inc., 1999 Slide 930 Irwin/McGrawHill DoubleDeclining Balance Graph of Depreciation Expense 9600576034562074110$0$ 1 ,0 0 0$ 2 ,0 0 0$ 3 ,0 0 0$ 4 ,0 0 0$ 5 ,0 0 0$ 6 ,0 0 0$ 7 ,0 0 0$ 8 ,0 0 0$ 9 ,0 0 0$ 1 0 ,0 0 01997 1998 1999 2022 2022 2022Fo r th e y e a r e nd e d De c e m be r 3 1Depreciation?The McGrawHill Companies, Inc., 1999 Slide 931 Irwin/McGrawHill Depreciation Methods in Use for Financial Reporting A sur v ey of 60 0 P ub l i cly O w ned Co r po r at i on s563441170539S tra i ght l i neDe c l i ni ngba l a nc eS um of t he y e a r s