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    Depreciation SL, SYD, and DDB methods

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    You are the CFO of a 720-bed tertiary care hospital. You have been presented with a capital expenditure request for a
    state-of-the-art MRI machine to be purchased on 01-01-09 for a cost of $1,250,000 with a useful life of 6 years and an
    expected salvage value of $35,000.

    Calculate depreciation for the entire 6 year period using four depreciation methods.

    For SL and SYD, calculate and use the depreciable base to determine yearly depreciation expense.
    For DDB, use the total asset cost to calculate yearly depreciation but do not let total depreciation be greater than the depreciable base.
    For MACRS, use Table 9-2.

    Total depreciation is the same for SL, SYD, and DDB. Some of the yellow highlighted cells may not require a value.

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    Solution Summary

    The solution examines depreciation SL, SYD and DDB methods.