DEPRECIATION

Problem 1: Fill out the table with the correct amount of depreciation expense using the
available data presented by each number. You are not required to show your solution(s),
every correct answer is equivalent to five (5) points.
1 2 3 4 5 6
Acquisition 1,000,000 800,000 1,250,000 25,000,00 3,875,000 2,125,000
Cost 0
Residual 100,000 10% of 12.5% of 20% of 75,000 325,000
Value cost cost cost
Useful Life 5 years 6 years 3 years 20 years 4 years 2 years
Acquisition 03/31/2015 07/01/2016 01/01/2016 06/30/2017 09/30/2015 10/01/2017
Date
Method Straight Double Sum of the Straight Double Sum of
Line Declining Years Digit Line Declining the Years
Digit
Compute for
the 12/31/2015 12/31/2016 12/31/2017 12/31/2017 12/31/2016 12/31/2017
Depreciation
Expense as of

Answer P 135,000 P 133,320 P 364,583.33 P 500,000 P1,695,312.5 P 300,000

Problem 2: You are not required to show your solution, correct answer is equivalent to
five (5) points
Hamilton Company provided you the following information at year end:

2016 2015
Building 25,000,000 25,000,000
Accumulated Depreciation 5,000,000 3,875,000

The straight line method of depreciation is used. The residual value is 10% of asset cost.
What is the useful life of the building? Answer: 20 years

Theory: Every correct answer is equivalent to 2 points

1. It is the systematic allocation of the depreciable amount of asset over its useful life.
Answer: Depreciation

2. It is the cost of an asset or other amount substituted for cost, less its residual value.
Answer: Depreciable amount

3. It is the estimated amount that an entity would currently obtain from disposal of the asset after
deducting the estimated cost of disposal if the asset were already of the age and in the
condition expected at the end of its useful life.
Answer: Residual value

4. The period over which an asset is expected to be available for use by an entity.
Answer: Useful life

5. The number of production or similar units expected to be obtained from the asset by an entity.
Answer: Useful life