# Calculation using different depreciation methods

Depreciation calculation methods. Hill Co. acquired a new delivery truck at the

beginning of its current fiscal year. The following information is available

cost $ 100,000

estimated useful life 6 years

estimated salvage value $ 7,000

Required:

a. Calculate depreciation expense for the first 4 years of the truck's life using:

1. Straight-line depreciation.

2. Sum-of-the-years'-digits depreciation.

3. Double-declining-balance depreciation.

b. Calculate the truck's net book value at the end of its third year of use under

each depreciation method.

c. Assume that Hill Co. had no more use for the truck after the end of the

third year and that at the beginning of the fourth year it had an offer from a

buyer who was willing to pay $6,200 for the truck. Should the depreciation

method used by Hill Co. affect the decision to sell the truck

https://brainmass.com/business/depreciation/calculation-using-different-depreciation-methods-182769

#### Solution Preview

Please see the attached file

Cost of the truck 100,000

Useful Life (years) 6

Salvage Value 7,000

1. Straight Line Depreciation

Depreciable Value 93,000

Depreciation per year 15,500

Depreciation Expense for 4 years 62,000

2. Sum of the years digit depreciation

The life is 6 years, so sum of the years digits are 6+5+4+3+2+1=21

The depreciation in 4 years is 6/21+5/21+4/21+3/21 = ...

#### Solution Summary

The solution explains the calculation of depreciation under straight-line, sum of years and double declining balance method