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    Calculating Depreciation

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    The Blue Spruce Inn has purchased a shuttle bus to transport guests to and from a local ski lodge. The cost of the bus is $80000; its salvage value is $10000; and its life is five years.

    Calculate the second year's depreciation under each of the following methods.
    1. Straight-line
    2. Sum of the years' digits
    3. Double declining balance.

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    Solution Preview

    1. Straight-line

    In straight line method the depreciation is the same every year
    Depreciation per year = (Cost - Salvage Value)/Useful Life
    Depreciation = ...

    Solution Summary

    The solution explains how to calculate depreciation using Straight-line, Sum of the years' digits and Double declining balance method