### Chapter 4 Review Exercises

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• 23. Outdoor Water Park

You own an outdoor water park and you purchase new equipment. Make a straight-line depreciation schedule for the equipment.

Cost: \$2500

Salvage value: \$500

Useful life: 5 years

• Worked-Out Solution

The depreciation each year is

A spreadsheet showing the depreciation schedule is shown below.

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``` __   _     ______               ___     __   __
| || | ||  /_   _//     ___     / _ \\   \ \\/ //
| '--' ||   -| ||-     /   ||  / //\ \\   \   //
| .--. ||   _| ||_    | [] || |  ___  ||  / . \\
|_|| |_||  /_____//    \__ || |_||  |_|| /_//\_\\
`-`  `-`   `-----`      -|_|| `-`   `-`  `-`  --`
`-`
```
• 24. Outdoor Water Park

You own an outdoor water park and you purchase new equipment. Make a straight-line depreciation schedule for the equipment.

Cost

Salvage value

Useful life

\$4000

\$1200

7 years

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```  _____     _____    _    _      ___      _____
/  ___||  |  ___|| | |  | ||   / _ \\   /  ___||
| // __    | ||__   | |/\| ||  | / \ || | // __
| \\_\ ||  | ||__   |  /\  ||  | \_/ || | \\_\ ||
\____//   |_____|| |_// \_||   \___//   \____//
`---`    `-----`  `-`   `-`   `---`     `---`

```
• 25. Outdoor Water Park

You own an outdoor water park and you purchase new equipment. A graph of the double declining-balance depreciation schedule for the equipment is shown. How much depreciation did you expense in year 1?

• Worked-Out Solution

From the graph, it appears that you expensed about \$14,000 for depreciation the first year.

The annual rate of decrease is

This implies that the depreciation for the first year is

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```  _  __    _____               _____     ______
| |/ //  |  ___||   ____     |  ___||  /_   _//
| ' //   | ||__    |    \\   | ||__    `-| |,-
| . \\   | ||__    | [] ||   | ||__      | ||
|_|\_\\  |_____||  |  __//   |_____||    |_||
`-` --`  `-----`   |_|`-`    `-----`     `-`'
`-`
```
• 26. Outdoor Water Park

You own an outdoor water park and you purchase new equipment. A graph of the double declining-balance depreciation schedule for the equipment is shown. How much depreciation did you expense in year 7?

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

``` _    _      ___      ______     ___
| || | ||   / _ \\   /_____//   / _ \\      ___
| || | ||  | / \ ||  `____ `   | / \ ||    /   ||
| \\_/ ||  | \_/ ||  /___//    | \_/ ||   | [] ||
\____//    \___//   `__ `      \___//     \__ ||
`---`     `---`    /_//       `---`       -|_||
`-`                     `-`
```
• 27. Comparing Depreciation Schedules

You own an outdoor water park and you purchase new equipment. A graph of the double declining-balance depreciation schedule for the equipment is shown. Using double declining-balance depreciation, how much more of the value did you expense during the first 4 years when compared to straight-line depreciation?

• Worked-Out Solution

The two types of depreciation schedules are shown below.

Straight-Line Depreciation

Double Declining-Balance Depreciation

Using straight-line depreciation, you depreciated

during the first 4 years.

Using double declining-balance depreciation, you depreciated

during the first 4 years. So, you depreciated

more using double declining-balance depreciation.

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```  _____    __   __   _    _    __   __   _____
/ ____||  \ \\/ // | |  | ||  \ \\/ // |  __ \\
/ //---`'   \ ` //  | |/\| ||   \ ` //  | |  \ ||
\ \\___      | ||   |  /\  ||    | ||   | |__/ ||
\_____||    |_||   |_// \_||    |_||   |_____//
`----`     `-`'   `-`   `-`    `-`'    -----`

```
• 28. Comparing Depreciation Schedules

You own an outdoor water park and you purchase new equipment. A graph of the double declining-balance depreciation schedule for the equipment is shown. Suppose you had used sum of the years-digits depreciation instead of double declining-balance depreciation. How much more did you expense during the first 4 years when compared to straight-line depreciation?

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
``` _    _     _____   __    __     ___      ______