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Activity I. Straight Line Method

1. The document provides examples of calculating depreciation and book value using the straight line and sinking fund methods. 2. Under the straight line method examples, it asks the reader to calculate book values, first costs, useful lives, and depreciation rates given various amounts for initial costs, salvage values, and time periods. 3. The sinking fund method examples similarly provide initial costs, salvage values, time periods and interest rates to calculate book values and depreciation amounts over the useful life of various assets.

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Jhune Uraba
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224 views2 pages

Activity I. Straight Line Method

1. The document provides examples of calculating depreciation and book value using the straight line and sinking fund methods. 2. Under the straight line method examples, it asks the reader to calculate book values, first costs, useful lives, and depreciation rates given various amounts for initial costs, salvage values, and time periods. 3. The sinking fund method examples similarly provide initial costs, salvage values, time periods and interest rates to calculate book values and depreciation amounts over the useful life of various assets.

Uploaded by

Jhune Uraba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ACTIVITY

I. STRAIGHT LINE METHOD

1. An engineer bought an equipment for P500,000. Other expenses including


installations amounted to P50,000. At the end of its estimated useful life of 10 years,
the salvage value will be 10% of the first cost. Using straight line method of
depreciation, what is the book value after 6 years?

2. A machine has a salvage value of P10,000 at the end of its useful life of 6 years. The
book value at the end of 5 years is P30,500. Using a straight line method of
depreciation, what is the first cost of the machine?

3. An engineer bought an equipment for P580,000. He spent an additional amount of


P30,000 for installation and other expenses. The salvage value is 12% of the first cost.
If the book value at the end of 5 years will be P291,500 using straight line method of
depreciation, compute the useful life of the equipment in years.

4. A machine has an initial cost of P50,00.00 and a salvage value of P15,000.00 after 10
years. What is the book value after 5 years using straight line method depreciation
rate?

5. The Alpha Drug Company has just purchased a capsulating machine for $2,000,000.
The plant engineer estimates that the machine has a useful life of five years and a
salvage value of $25,000 at the end of its useful life. Compute the depreciation
schedule for the machine by each of the following depreciation methods:

(a) Straight line method of depreciation


(b) Sum-of-the-years digits method of depreciation
(c) Double declining balance method of depreciation

II. SINKING FUND METHOD

1. A certain office equipment has a first cost of P25,000 and has a salvage value of
P1,000 at the end of 10 years. Determine the (a) depreciation at the end of the 6th
year, (b) the book value of the equipment after 4 years using Sinking fund method
at 4% interest.
2. An engineer bought an equipment for P500,000. Other expenses including
installations amounted to P50,000. At the end of its estimated useful life of 10 years,
the salvage value will be 10% of the first cost. Using Sinking fund Method, what is the
book value after 6 years? Use sinking fund rate of 3%.

3. The initial cost of a piece of construction equipment is $3,000,000 having a useful life
of 10years. The estimated salvage value of the equipment at the end of the useful
life is $450,000 Tabulate the annual depreciation amounts and the book value of the
equipment at the end of each year. using Sinking fund method, if interest rate is 8.2
% per year.

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