A piece of equipment is purchased for $110,000 and has an estimated salvage value of $10,000 at the end of the recovery period. (a) Prepare a depreciation schedule for the piece of equipment using the straight-line method with a recovery period of seven years. (b) Prepare a depreciation schedule for the piece of equipment using the sum-of the-years method. (c) Prepare a depreciation schedule using the 200% declining balance method. (d) Prepare a depreciation schedule using the 150% declining balance method.

Year //dep expense //ac dep //book value

-                                     $110,000.00

1  $14,285.71   $14,285.71   $95,714.29

2  $14,285.71   $28,571.43   $81,428.57

3  $14,285.71   $42,857.14   $67,142.86

4  $14,285.71   $57,142.86   $52,857.14

5  $14,285.71   $71,428.57   $38,571.43

6  $14,285.71   $85,714.29   $24,285.71

7  $14,285.71   $100,000.00   $10,000.00

SUM OF YEARS

Year //factor// dep expense //ac dep //book value

-                                                       $110,000.00

1  0.25     $25,000.00   $25,000.00   $85,000.00

2  0.21     $21,428.57   $46,428.57   $63,571.43

3  0.18     $17,857.14   $64,285.71   $45,714.29

4  0.14     $14,285.71   $78,571.43   $31,428.57

5  0.11     $10,714.29   $89,285.71   $20,714.29

6  0.07     $7,142.86   $96,428.57   $13,571.43

7  0.04     $3,571.43   $100,000.00   $10,000.00

200% double declining:

150% accelerated depreaciation:

Explanation:

Straight Line:

Acquisition Value110,000

Salvage Value10,000

ammount subject to depreciation100000

Useful Life7

depreciation per year:

depreciable amount divided by useful life  14285.71

This amount is repeatead throughout the life of the equipment.

SUM OF YEARS FACTORS:

sum of year: 7*8/2 = 28

remaining years over sum of year

1st               7/28

2nd            6/28

3rd             5/28

4th             4/28

5th             3/28

6th             2/28

7th             1/28

Double declining 200%

we have to multiply 1/useful life by the double declining facot

in this case as it is 200% it will be 2.

threfore the carrying vlue is multiplied by 2/7 each year to determinatethe depreciation expense

declining 150%

here we multiply by 1.5 resulting in a factor of 3/14 to obtain the depreciation expense

the answer is a. $209,000