Ex.

38B
Remain in service 5 years
Photo Equipment 224000 Residual Value 20000
Transporation cost 700 First Year prod. 50000
Insurance cost 100 Second year 45000
Sales tax 12100 Third year 40000
Trainings cost 3100 Fourth Year 35000
Fifth Year 30000
Total prod. 200000

Asset Cost 240000

Requirement 1
1. Straight-Line Method

Calculating depreciation (Cost-Residual Value)/Useful Life

= 40800

Depreciation of the Year

Date Asset Cost Depriciable Cost Depreciation Rate
Jan-7-20X1
Jan-7-20X1 240000 224000 5 years
Jan-7-20X2 224000 5 years
Jan-7-20X3 224000 5 years
Jan-7-20X4 224000 5 years
Jan-7-20X5 224000 5 years

2. Units-of-Production Method

Calculating depreciaiton (Cost-Residual Value/Useful Life in Units)

= 1.1

Depreciation of the Year

Date Asset Cost Depreciation per Unit Number of Units
Jan-7-20X1
Jan-7-20X1 240000 1.1 50000
Jan-7-20X2 1.1 45000
Jan-7-20X3 1.1 40000
Jan-7-20X4 1.1 35000
Jan-7-20X5 1.1 30000

3. Double-Declining-Balance
Straight line depreciation rate 20%
Double-decline depreciation rate 40%

Depreciation of the Year

Date Asset Cost Book Value DDB Rate
Jan-7-20X1 240000
Jan-7-20X1 240000 40%
Jan-7-20X2 144000 40%
Jan-7-20X3 86400 40%
Jan-7-20X4 51840 40%
Jan-7-20X5 31104 40%

Requirement 2 Straight-Line method; as it only accounts actual asset cost and therefore reports lowest depreci
 Ani Mazanashvili 177665

of the Year
Depreciation Expense Accumulated Depreciation Book Value
224000
40800 40800 199200
40800 81600 142400
40800 122400 101600
40800 163200 60800
40800 204000 20000

of the Year
Depreciation Expense Accumulated Depreciation Book Value
240000
55000 55000 199200
49500 104500 135500
44000 148500 91500
38500 187000 53000
33000 220000 20000
of the Year
Depreciation Expense Accumulated Depreciation Book Value
240000
96000 96000 144000
57600 153600 86400
34560 188160 51840
20736 208896 31104
12441.6 221337.6 18662.4

therefore reports lowest depreciation expense for the year 1. It will also report the highest net income