1.

A pharmaceutical company has testing machines on which it estimates depreciation by the

straight-line method. The following table shows cost, estimated life, years used, and scrap
value for each machine. Find the annual depreciation, total depreciation, and book value
after the indicated number of years of use.

Estimated Years used Scrap Value Annual Dep Total dep to Book value
Original life ($) date
cost ($)
30000 10 4 3000
48000 7 4 5300
84000 8 2 None
34600 6 2 1000

2. Ace Delivery Service bought two new trucks. The following table shows the cost, scrap value,
estimated life (in miles), and mileage for the first year. Using the straight-line method based on
mileage driven, compute the first year’s depreciation and the book value at the end of the first year
for each truck.

Estimated Mileage Scrap Value Dep for first BV after 1

Original life(miles) first year ($) year year
cost ($)
49500 150000 21700 1500
23000 80000 9500 600

3. Anderson Tool and Die Company owns a group of machines, the details of which are shown in the

following table. Anderson uses the double-declining-balance method of calculating depreciation.

Compute the depreciation for the specific years indicated.

Estimated Scrap Value Year depreciation Year Depreciation

Original life ($)
cost ($)
32000 16 1200 1 3
25800 5 3000 3 5
8000 4 300 2 3
15000 10 - 3 5

4. The Western Salvage Service bought three trucks. The following table shows the cost, estimated
life, and resale estimate for each truck. Use the sum-of-the-years-digits method to find each
truck’s depreciationfor the first and second years of use. Round answers to the nearest dollar

.
Estimated Resale Depreciation Depreciation
Original life Estimate for first year for second
cost ($) ($) year
36000 6yr 6000
48000 5yr 8000
60000 7yr 12000