Early in 20x3, Shifter, Inc. wrote put options for 1,000 shares of its common stock. Purchasers of the options can sell Shifter
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Answer:
Depreciation is defined as fall or decline in the value of an asset due to normal wear and tear or efflux of time.
Depreciation as per straight line method =
Depreciation to be written off every year =
= $38,960
Hence rate of depreciation under straight line method (SLM) = $38960/$238,400= 16.34% per annum
Rate of depreciation as per double declining method = 2 × rate of depreciation as per SLM
= 2 × 16.34%= 32.68%
Under double declining method, depreciation expense each year= double decling rate in percent × book value of the asset at the beginning of each year
Depreciation for first year= 32.68% × 238400= $77,909
Depreciation for year 2 = 32.68% of (238,400- 77,909 )= $52,448
Year 3= 32.68% of (238,400- 77,909-52448)= $35,308
Year 4= 32.68% of (238,400-77,909-52,448-35,308)= $23,770
Year 5= 32.68% of (238,400- 77,909-52,448-35308-23770)= $16,001
Answer
The answer and procedures of the exercise are attached in the following archives.
Consider the excel document where the source of the results is plotted.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
