For each of the following fixed assets, determine the depreciation expense for year 3: disposal date is n/a if asset is still in use. method: sl = straight-line; ddb = double declining balance assume the estimated life is 5 years for each asset. item cost residual value purchase date disposal date depreciation method depreciation expense year 3 a $40,000 $4,000 july 1, year 3 n/a sl $ 3,600 b $50,000 $5,000 jan. 1, year 1 aug. 31,year 3 sl $ 6,000 c $60,000 $2,000 oct. 1, year 3 n/a ddb $ 6,000 d $80,000 $10,000 jan. 1, year 2 april 1, year 3 ddb $ 14,400

(i) $3,600  

(ii) $6,000

(iii) $6,000

(iv) $4,800

Explanation:

Item A:

Depreciation per annum = (Cost - Residual Value) ÷ Useful life

= (40,000 - 4,000) ÷ 5

= 36,000 ÷ 5

= $7,200

Since the asset was purchased on July 1, year 3, it was in use for 6 months.

Depreciation for year 3

= Depreciation per annum × 6/12

= $7200 × 6/12

= $3,600  

Item B:

Depreciation per annum = (Cost - Residual Value) / Useful life

= (50,000 - 5,000) ÷ 5

= 45,000 ÷ 5

= $9,000

Since it was sold on August 31, year 3, it was in use in year 3 for 8 months.

Depreciation for year 3 :

= Depreciation per annum × 8/12

= 9,000 × 8/12

= $6,000

Item C:

Depreciation under SL = (Cost - Residual Value) ÷ Useful life

= (60,000 - 2,000) × 5

= 58,000 × 5

= $11,600

Depreciation rate under SL = Depreciation ÷ Cost

                                              = 11600 ÷ 58000

                                              = 20%

Depreciation rate under DDB method = 20 × 2

                                                               = 40%

Since it was purchased on Oct 1 year 3, it was in use for 3 months.

Depreciation for year 3:

= Cost × Rate × 3/12

= 60,000 × 40% × 3/12

= $6,000

Item D:

Depreciation under SL = (Cost - Residual Value) ÷ Useful life

= (80,000 - 10,000) ÷ 5

= 70,000 ÷ 5

= $14,000

Depreciation rate under SL = Depreciation ÷ Cost

                                              = 14,000 ÷ 70,000

                                              = 20%

Depreciation rate under DDB method = 20 × 2

                                                                = 40%

Depreciation for year 2 = $80,000 × 40%

                                       = $32,000

Net Book Value at the end of year 2 = 80,000 - 32,000

                                                             = $48,000

Since it was sold on April 1 year 3, it was in use in Year 3 for 3 months.

Depreciation for year 3 :

= Book Value × Rate × 3/12

= 48000 × 40% × 3/12

= $4,800

A. Depreciation expense Year 3, (SL)= 3600

 B. Depreciation expense Year 3, Aug 31 (SL)= 6000

C. Depreciation Expense Year 3, (DDB)= 6000

D. Depreciation Expense Year 3 April 1 (DDB)= 4800

Explanation:

The straight line method of depreciation spreads depreciation over the life of an asset equally each year. In other words, yearly depreciation is fixed.

It is calculated as: SL; Depreciation expense= (Cost-Residual value)/ (lifetime of asset)

A.Depreciation expense= (40000-4000)/5

Depreciation expense= 7200 (yearly depreciation)

7200 is yearly depreciation value;

Depreciation expense in year 3= 7200(6/12), where 6 is the number of months from July 1, year 3 to December 31, year 3.

Depreciation expense in year 3= 3600

B.Depreciation expense= (50000-5000)/5

Depreciation expense= 9000 (yearly depreciation)

9000 is yearly depreciation value;

Depreciation expense in year 3= 9000(8/12), where 8 is the number of months from January 1, year 3 to August 31, year 3.

Depreciation expense in year 3= 6000

The double declining balance method of depreciation works in such a way that higher values of depreciation are deducted in the early years of the asset. It ignores the residual values. It is calculated as:

DDB expense= (DDB%)(Book value)

Where: DDB%= (100%/Lifetime)2

Book value= Cost- Accumulated depreciation

C.DDB%= (100%/5)2

DDB%= 40%

Thus, DDB expense = 40%(60000)

DDB expense = 24000

24000 is one year depreciation, so we have to convert this into 3 months (i.e October1, year3 to December 31, year 3) by multiplying by (3/12)

DDB depreciation expense = 24000(3/12) =6000

D. For explanation of this please find attached file below.

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answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;