Please tell me is depreciation included in intermediate cost?
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On April 1, 2011, Company A purchased an equipment at the cost of $140,000. This equipment is estimated to have 5 year useful life. At the end of the 5th year, the salvage value (residual value) will be $20,000. Company A recognizes depreciation to the nearest whole month. Calculate the depreciation expenses for 2011, 2012 and 2013 using straight line depreciation method.
Depreciation for 2011
= ($140,000 - $20,000) x 1/5 x 9/12 = $18,000
Depreciation for 2012
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Depreciation for 2013
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Declining Balance Depreciation Method
 Depreciation = Book value x Depreciation rate
Book value = Cost - Accumulated depreciation
Depreciation rate for double declining balance method
= Straight line depreciation rate x 200%
Depreciation rate for 150% declining balance method
= Straight line depreciation rate x 150%
[Example, Double declining balance depreciation]
On April 1, 2011, Company A purchased an equipment at the cost of $140,000. This equipment is estimated to have 5 year useful life. At the end of the 5th year, the salvage value (residual value) will be $20,000. Company A recognizes depreciation to the nearest whole month. Calculate the depreciation expenses for 2011, 2012 and 2013 using double declining balance depreciation method.
Useful life = 5 years --> Straight line depreciation rate = 1/5 = 20% per year
Depreciation rate for double declining balance method
= 20% x 200% = 20% x 2 = 40% per year
Depreciation for 2011
= $140,000 x 40% x 9/12 = $42,000
Depreciation for 2012
= ($140,000 - $42,000) x 40% x 12/12 = $39,200
Depreciation for 2013
= ($140,000 - $42,000 - $39,200) x 40% x 12/12 = $23,520
Depreciation for 2011
= ($140,000 - $20,000) x 1/5 x 9/12 = $18,000
Depreciation for 2012
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Depreciation for 2013
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Declining Balance Depreciation Method
 Depreciation = Book value x Depreciation rate
Book value = Cost - Accumulated depreciation
Depreciation rate for double declining balance method
= Straight line depreciation rate x 200%
Depreciation rate for 150% declining balance method
= Straight line depreciation rate x 150%
[Example, Double declining balance depreciation]
On April 1, 2011, Company A purchased an equipment at the cost of $140,000. This equipment is estimated to have 5 year useful life. At the end of the 5th year, the salvage value (residual value) will be $20,000. Company A recognizes depreciation to the nearest whole month. Calculate the depreciation expenses for 2011, 2012 and 2013 using double declining balance depreciation method.
Useful life = 5 years --> Straight line depreciation rate = 1/5 = 20% per year
Depreciation rate for double declining balance method
= 20% x 200% = 20% x 2 = 40% per year
Depreciation for 2011
= $140,000 x 40% x 9/12 = $42,000
Depreciation for 2012
= ($140,000 - $42,000) x 40% x 12/12 = $39,200
Depreciation for 2013
= ($140,000 - $42,000 - $39,200) x 40% x 12/12 = $23,520
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