A

1 Purchase Price R$ 35,000

Sales Tax R$ 2,200
Shipping Cost R$ 150
Insurance During Shipping R$ 80
Installation and Testing R$ 70
Total Cost of Machine R$ 37,500

Date Account Titles Debit Credit

01/01/20 Equipment R$ 37,500
Cash R$ 37,500

2 Recorded Cost R$ 37,500

Less: Residual Value R$ 5,000
Depreciable Cost R$ 32,500
Years of Useful Life 5
Annual Depreciation R$ 6,500

Date Account Titles Debit Credit

31/12/20 Depreciation Expense R$ 6,500
Accumulated Depreciation R$ 6,500
B
1 Recorded Cost R$ 80,000 Compulation
Less: Residual Value R$ 5,000 Year Depreciable Cost
Depreciable Cost R$ 75,000 2020 R$ 75,000
Years of Useful Life 4 2021 R$ 75,000
Annual Depreciation R$ 18,750 2022 R$ 75,000
Depreciation Rate = 100%/Years of Useful Life 2023 R$ 75,000
Depreciation Rate = 100%/4
Depreciation Rate = 25%

2 Book Value at Beginning of Year R$ 80,000 Compulation

Useful Life 4 Year Book Value Beginning of Year
Depreciation Rate = (100%/Years of Useful Life)x2 2020 R$ 80,000
Depreciation Rate = (100%/4)x2 2021 R$ 40,000
Depreciation Rate = 50% 2022 R$ 20,000
2023 R$ 10,000

C
1 The Highest Amount of Depreciation Expense in Year 1 (2020) Declining Balance Method =R
2 The Highest Amount of Depreciation Expense in Year 4 (2023) Straight Line Method = R$ 18
3 The Highset Total Amount Depreciation Expense Over The 4 Years Period (2020-2023) No matter which of these 2 m
 PELE'S INDUSTRIES
Compulation End of Year
Annual Depreciation Expense
Depreciable Cost Depreciation Rate Accumulated Depreciation Book Value
R$ 75,000 25% R$ 18,750 R$ 18,750 R$ 61,250
R$ 75,000 25% R$ 18,750 R$ 37,500 R$ 42,500
R$ 75,000 25% R$ 18,750 R$ 56,250 R$ 23,750
R$ 75,000 25% R$ 18,750 R$ 75,000 R$ 5,000

PELE'S INDUSTRIES
Compulation End of Year
Annual Depreciation Expense
lue Beginning of Year Depreciation Rate Accumulated Depreciation Book Value
R$ 80,000 50% R$ 40,000 R$ 40,000 R$ 40,000
R$ 40,000 50% R$ 20,000 R$ 60,000 R$ 20,000
R$ 20,000 50% R$ 10,000 R$ 70,000 R$ 10,000
R$ 10,000 50% R$ 5,000 R$ 75,000 R$ 5,000

Declining Balance Method =R$ 40.000

Straight Line Method = R$ 18.750
No matter which of these 2 method, the total depreciation of each methods are same at 4 years period
Book Value
R$ 61,250
R$ 42,500
R$ 23,750
R$ 5,000

Book Value
R$ 40,000
R$ 20,000
R$ 10,000
R$ 5,000