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4.4 Depreciation

4.4 Depreciation
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  • 15. Kitchen Equipment Depreciation

    The owner of a restaurant buys new kitchen equipment.

    Cost: $4500

    Salvage value: $0

    Useful life: 5 years

    Make a sum of the years-digits depreciation schedule for the equipment. (See Example 5.)

    A spreadsheet is available to help you complete this exercise.

    • Worked-Out Solution

      A sum of the years-digits depreciation schedule for the equipment is shown in the spreadsheet below.

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      ______    ______     _____    _____    _    _   
     /_____//  /_   _//   / ___//  |  ___|| | || | || 
     `____ `    -| ||-    \___ \\  | ||__   | || | || 
     /___//     _| ||_    /    //  | ||__   | \\_/ || 
     `__ `     /_____//  /____//   |_____||  \____//  
     /_//      `-----`  `-----`    `-----`    `---`   
     `-`                                              
    
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  • 16. Kitchen Equipment Depreciation

    The owner of a restaurant buys new kitchen equipment.

    Cost: $400

    Salvage value: $50

    Useful life: 7 years

    Make a sum of the years-digits depreciation schedule for the equipment. (See Example 5.)

    A spreadsheet is available to help you complete this exercise.

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               _    _     ______    ______    _____   
        ___   | || | ||  /_   _//  /_   _//  / ____|| 
       /   || | || | ||    | ||     -| ||-  / //---`' 
      | [] || | \\_/ ||   _| ||     _| ||_  \ \\___   
       \__ ||  \____//   /__//     /_____//  \_____|| 
        -|_||   `---`    `--`      `-----`    `----`  
         `-`                                          
    
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  • 17. Restaurant Equipment Depreciation

    The owner of a restaurant buys new equipment. The salvage value of the equipment is $25,000.

    The graph shows three methods that the restaurant can use to depreciate the equipment.

    Which method depreciates the value the most during the first 3 years? (See Example 6.)

    • Worked-Out Solution

      From the graph, you can see that after 3 years, the green graph is the lowest. Therefore, the double declining-balance method depreciates the most during the first 3 years.

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     ______      ___      ______    ______   ______   
    |      \\   / _ \\   /_____//  /_   _// |      \\ 
    |  --  //  / //\ \\  `____ `    -| ||-  |  --  // 
    |  --  \\ |  ___  || /___//     _| ||_  |  --  \\ 
    |______// |_||  |_|| `__ `     /_____// |______// 
    `------`  `-`   `-`  /_//      `-----`  `------`  
                         `-`                          
    
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  • 18. Restaurant Equipment Depreciation

    The owner of a restaurant buys new equipment. The salvage value of the equipment is $25,000. The graph shows three methods that the restaurant can use to depreciate the equipment. Which method depreciates the value the most during years 4 through 10? (See Example 6.)

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       _____   _    _     ______     ___      _____   
      / ___// | || | ||  /_   _//   / _ \\   / ____|| 
      \___ \\ | || | ||    | ||    / //\ \\ / //---`' 
      /    // | \\_/ ||   _| ||   |  ___  ||\ \\___   
     /____//   \____//   /__//    |_||  |_|| \_____|| 
    `-----`     `---`    `--`     `-`   `-`   `----`  
                                                      
    
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  • 19. Restaurant Equipment Depreciation

    The owner of a restaurant buys new equipment. The salvage value of the equipment is $25,000. The graph shows three methods that the restaurant can use to depreciate the equipment. Using sum of the years-digits depreciation, how much more of the value did the restaurant expense during the first 4 years when compared to straight-line depreciation? (See Example 6.)

    • Worked-Out Solution

      From the graph, you can see that the sum of the years-digits method depreciated about $100,000 more during the first 4 years than the straight-line method. To check this estimate, you can compare the depreciation schedules for the two methods.

      From the spreadsheets, you can see that the straight-line method depreciated

      during the first 4 years. The sum of the years-digits method depreciated

      during the first 4 years. The difference is $103,636.36.

    Comments (3)

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      ______     ___      _  _     ______    ______  
     /_   _//   / _ \\   | \| ||  /_   _//  /_   _// 
       | ||    | / \ ||  |  ' ||   -| ||-   `-| |,-  
      _| ||    | \_/ ||  | .  ||   _| ||_     | ||   
     /__//      \___//   |_|\_||  /_____//    |_||   
     `--`       `---`    `-` -`   `-----`     `-`'   
                                                     
    
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    system user
    Cody (moderator)6 years ago |
    Michelle,

    We have looked at the spreadsheet and found that there was an error in the data. The problem was fixed and the new spreadsheet was posted to the site.

    Thank you.
    0
    system user
    Cody (moderator)6 years ago |
    Thank you for letting me know. I will take a look into this spreadsheet as well.
    0
    system user
    Guest   6 years ago |
    Again, the spreadsheet is incorrect in the depreciation column of the Single-Line Depreciation method.
    Michelle Swenson
    Math Teacher
    Ray High School, ND
    0
  • 20. Restaurant Equipment Depreciation

    The owner of a restaurant buys new equipment. The salvage value of the equipment is $25,000. The graph shows three methods that the restaurant can use to depreciate the equipment. Suppose the restaurant sells the equipment for $250,000 after 4 years. Describe the restaurant's gain or loss using each method. (See Example 6.)

    data folder

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      ______    ______             _    _   __    __  
     /_   _//  /_   _//     ___   | || | || \ \\ / // 
       | ||     -| ||-     /   || | || | ||  \ \/ //  
      _| ||     _| ||_    | [] || | \\_/ ||   \  //   
     /__//     /_____//    \__ ||  \____//     \//    
     `--`      `-----`      -|_||   `---`       `     
                             `-`                      
    
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    system user
    Cody (moderator)6 years ago |
    Michelle,

    We have fixed the error in this spreadsheet as well. The updated spreadsheet was posted to the site.

    Thank you.
    0
    system user
    Cody (moderator)6 years ago |
    I will look into this spreadsheet as well. Thank you.
    0
    system user
    Guest   6 years ago |
    The data seems to be incorrect when entered into the spreadsheet for everything but the sum of the years-digit column.
    Michelle Swenson
    Math Teacher
    Ray High School, ND
    0
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