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Review Questions
Notice the accelerated depreciation: higher rates in the first years and lower
toward the end.
REVIEW QUESTIONS
It is interesting to note that different assets have different
or
guidelines for depreciable life. Land, for example, is not depreciable. Buildings have
different life spans of 20
economic lives
60 years. Certain machinery could be depreciated in five
years and computers in four years.
1. The initial cost of the asset is \$200,000. Its salvage value is \$30,000.
n Calculate the SYD function for five years.
n Calculate it for seven years.
2. The initial cost of the asset is \$30,000. Its salvage value is \$3,000.
n
Calculate the SLD for six years.
Calculate it again for 10 years.
n
1. \$34,000 for
ve years and \$24,285.71 for seven years.
2.
6 Years
Year
Depreciation
1
\$7,714.29
2
\$6,428.57
3
\$5,142.86
4
\$3,857.14
5
\$2,571.43
6
\$1,285.71
10 Years
Year
Depreciation
1
\$4,909.09
2
\$4,418.18
3
\$3,927.27
4
\$3,436.36
5
\$2,945.45
6
\$2,454.55
7
\$1,963.64
8
\$1,472.73
9
\$981.82
10
\$490.91

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