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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)1 decade 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)1 decade ago |
    Thank you for letting me know. I will take a look into this spreadsheet as well.
    0
    system user
    Guest   1 decade 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)1 decade 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)1 decade ago |
    I will look into this spreadsheet as well. Thank you.
    0
    system user
    Guest   1 decade 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