a.

Straight-Line Method

Annual depreciation = _Original Cost less residual Value_

Useful life in years
Annual depreciation = _____Depreciation Amount____
Useful life in years

Solution:
Annual Depreciation = 225,555,000 - 12,555,000 _
10
= ________213,000,000________
10
= 21,300,000

Year PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000

2020 1st Year P21,300,000 P21,300,000 P204,255,000

Depreciation
2021 2nd Year 21,300,000 42,600,000 182,955,000
Depreciation
2022 3rd Year 21,300,000 63,900,000 161,655,000
Depreciation
2023 4th Year 21,300,000 85,200,000 140,355,000
Depreciation
2024 5th Year 21,300,000 106,500,000 119,055,000
Depreciation
2025 6th Year 21,300,000 127,800,000 97,755,000
Depreciation
2026 7th Year 21,300,000 149,100,000 76,455,000
Depreciation
2027 8th Year 21,300,000 170,400,000 55,155,000
Depreciation
2028 9th Year 21,300,000 191,700,000 33,855,000
Depreciation
2029 10th Year 21,300,000 P213,000,000 P12,555,000
Depreciation
TOTAL P213,000,000

b. Output Method

Depreciation Rate = __Depreciable Amount__

 Total Number of Units
Annual depreciation = Depreciation rate X Number of Units produced per
period

Solution:
Depreciation Rate = 213,000,000 _
3,000,000 units
= P71 per unit

Year PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000

2020 400,500 x P71.00 P28,435,500 P28,435,500 197,119,500

2021 380,000 x P71.00 26,980,000 55,415,500 170,130,500

2022 370,000 x P71.00 26,270,000 81,685,500 143,860,500

2023 362,400 x P71.00 25,730,400 107,415,900 118,130,100

2024 320,500 x P71.00 22,755,500 130,171,400 95,374,600

2025 280,200 x P71.00 19,894,200 150,065,600 75,480,400

2026 260,600 x P71.00 18,502,600 168,568,200 56,977,800

2027 240,000 x P71.00 17,040,000 185,608,200 39,937,800

2028 200,200 x P71.00 14,214,200 199,822,400 25,723,600

2029 185,600 x P71.00 13,177,600 P213,000,000 P12,555,000

TOTAL P213,000,000
c. Working Hours Method

Depreciation Rate = ____Depreciable Amount__

Total working hours capacity
Annual depreciation = Depreciation rate X Number of working hours per
period

Solution:

Depreciation Rate = 213,000,000 _

1,000,000 hours
= P213 per hour

Year PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000
2020 P96,000 x 213 P20,448,000 P20,448,000 205,107,000

2021 97,000 x 213 20,661,000 41,109,000 184,446,000

2022 97,500 x 213 20,767,500 61,876,500 163,678,500

2023 97,500 x 213 20,767,500 82,644,000 142,911,000

2024 97,500 x 213 20,767,500 103,411,500 122,143,500

2025 98,000 x 213 20,874,000 124,285,500 101,269,500

2026 98,500 x 213 20,980,500 145,266,000 80,289,000

2027 101,000 x 213 21,513,000 166,779,000 58,776,000

2028 105,500 x 213 22,471,500 189,250,500 36,304,500

2029 111,500 x 213 23,749,500 P213,000,000 P12,555,000

TOTAL P213,000,000
d. Sum-of-the-year’s digits method

Usefullife ∈ years+1
Sum-of-the-years’ digits = Useful life in years X
2
For the first year:
Usefullife ∈ years
Annual depreciation=
∑ −of −the− year ’ s digits X Depreciable Amount
For the Subsequent years:
Remaining life∈ years
Annual depreciation= = X Depreciable Amount
∑ −of −the− year ’ s digits
Solution:
10+1
Sum-of-the-years’ digits = 10 X
2
= 55

YEARS PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000
2020 213,000,000 X10/55 P38,727,273 P38,727,273 186,827,727

2021 213,000,000 X9/55 34,854,545 73,581,818 151,973,182

2022 213,000,000 X8/55 30,981,818 104,563,636 120,991,364

2023 213,000,000 X7/55 27,109,091 131,672,727 93,882,273

2024 213,000,000 X6/55 23,236,364 154,909,091 70,645,909

2025 213,000,000 X5/55 19,363,636 174,272,727 51,282,273

2026 213,000,000 X4/55 15,490,909 189,763,636 35,791,364

2027 213,000,000 X3/55 11,618,182 201,381,818 24,173,182

2028 213,000,000 X2/55 7,745,455 209,127,273 16,427,727

2029 213,000,000 X1/55 3,872,727 P213,000,000 P12,555,000

TOTAL P213,000,000
e. 150% Declining Balance Method

1
Declining Rate = X 150%
Usefullife ∈ years
For the First Year:
Annual Depreciation = Declining Rate X Cost of the Asset
For the Subsequent Years:
Annual Depreciation = Declining Rate X Carrying Value of the Asset

Solution:

1
Declining Rate = X 150% = 15%
10

YEARS PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000
2020 P225,555,000 x 15% P33,833,250 P33,833,250 P191,721,750

2021 P191,721,750 x 15% 28,758,263 62,591,513 P162,963,487

2022 P162,963,487 x 15% 24,444,523 87,036,036 P138,518,964

2023 P138,518,964 x 15% 20,777,845 107,813,881 P117,741,119

2024 P117,741,119 x 15% 17,661,168 125,475,049 P100,079,951

2025 P100,079,951 x 15% 15,011,993 140,487,042 P85,067,958

2026 P85,067,958 x 15% 12,760,194 153,247,236 P72,307,764

2027 P72,307,764 x 15% 10,846,165 164,093,401 P61,461,599

2028 P61,461,599 x 15% 9,219,240 173,312,641 P52,242,359

2029 P52,242,359- 39,687,359 P213,000,000 P12,555,000

12,555,000
TOTAL P213,000,000
f. 200% Declining Balance Method

1
Declining Rate = X 200%
Usefullife ∈ years
For the First Year:
Annual Depreciation = Declining Rate X Cost of the Asset
For the Subsequent Years:
Annual Depreciation = Declining Rate X Carrying Value of the Asset

Solution:

1
Declining Rate = X 200% = 20%
10

YEARS PARTICULARS DEPRECIATIO ACCUMULATE CARRYING

N D AMOUNT
DEPRECIATIO
N
Original Cost
P225,555,000
2020 P225,555,000 x 20% P45,111,000 P45,111,000 P180,444,000

2021 P 180,444,000x 20% P36,088,800 P81,199,800 P144,355,200

2022 P144,355,200 x 20% P28,871,040 P110,070,840 P115,484,160

2023 P115,484,160 x 20% P23,096,832 P133,167,672 P92,387,328

2024 P92,387,328 x 20% P18,477,466 P151,645,138 P 73,909,862

2025 P 73,909,862 x 20% P14,781,972 P166,427,110 P59,127,890

2026 P59,127,890 x 20% P11,825,578 P178,252,688 P47,302,312

2027 P47,302,312 x 20% P9,460,462 P187,713,150 P37,841,850

2028 P37,841,850 x 20% P7,568,370 P195,281,520 P 30,273,480

2029 P 30,273,480- P17,718,480 P213,000,000 P12,555,000

12,555,000
TOTAL P213,000,000
Requirement 2. Recommendation Letter:

October 31,2021

To Whom It May Concern:

Good day! I am the accountant of our company, the Conjuring Company. As an

accountant it’s my job to give you some recommendation on what depreciation method should
our company use, as all the non- current assets except the land is subject to depreciation. There
are a lot of depreciation method that we can use but as what I observed straight- line method
would be the best choice. This method is the simplest and the most common depreciation method
used by different kinds of company. To calculate the depreciation using this method, all we need
to do is divide the cost of the asset evenly over its useful life. To use this method, we need to
know first how much the asset cost, we also need to find the useful life of the asset and last, we
need to establish the salvage value for the asset. To determine its salvage value, we can now
analyze how much the asset will cost at the end of its life.
Other methods like declining balance method, sum-of-the-year method require more
complicated calculations. So, I decided to go with the straight-line method to be use in our
company.

Sincerely,

_ Jillian Mae S. Belegorio,CPA__

Accountant
Conjuring Company