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Compute the depreciation expense and year-end book values

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Question - On July 1, 2016, ABC Company purchased for Br.2,160,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of Br.90,000. Depreciation is taken for the portion of the year the asset is used.

Required -

A. Compute the depreciation expense and year-end book values for 2016 and 2017 using the Sum-of-the-years'-digits method and Double-declining balance method.

B. Assume the company had used straight-line depreciation during 2016 and 2017. During 2018, the company determined that the equipment would be useful to the company for only one more year beyond 2018. Salvage value is estimated at Br.120,000. Compute the amount of depreciation expense for the 2018 income statement.

Reference no: EM132556762

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