Compute the SOYD depreciation schedule for the situation in Example 11-2 $(\$ in thousands)$ .

Cost of the asset, B $\$900$

Depreciable life, in years, N 5

Salvage value, S $\$70$

Question

Compute the SOYD depreciation schedule for the situation in Example 11-2 [latex](\$ in thousands)[/latex].

Cost of the asset, B [latex] \$900[/latex]

Depreciable life, in years, N 5

Salvage value, S [latex]\$70[/latex]

Accepted Answer

[latex]SOYD =\frac{5×6}{2}=15[/latex]

Thus,

[latex]d_{1}=\frac{5-1+1}{15}\left( 900-70 \right)=277[/latex]

[latex]d_{2}=\frac{5-2+1}{15}\left( 900-70 \right)=221[/latex]

[latex]d_{3}=\frac{5-3+1}{15}\left( 900-70 \right)=166[/latex]

[latex]d_{4}=\frac{5-4+1}{15}\left( 900-70 \right)=111[/latex]

[latex]d_{5}=\frac{5-5+1}{15}\left( 900-70 \right)=55[/latex]

Year,	Depreciation for Year t [latex]\left( \$000 \right),d_{t}[/latex]	Sum of Depreciation Charges Up to Year t [latex]\left( \$000 \right),\sum_{j=1}^{t}d_{j}[/latex]	Book Value at End of Year t [latex](\$000),BV_{t}=B-\sum_{j=1}^{t}d_{j}[/latex]
1	[latex]\$277[/latex]	[latex]\$277[/latex]	900 - 277 = 623
2	221	498	900 - 498 = 402
3	166	664	900 - 664 = 236
4	111	775	900 - 775 = 125
5	55	830	900 - 830 = 70 = S

These data are plotted in Figure 11-4.

Year,	Depreciation for Year t $\left( \$000 \right),d_{t}$	Sum of Depreciation Charges Up to Year t $\left( \$000 \right),\sum_{j=1}^{t}d_{j}$	Book Value at End of Year t $(\$000),BV_{t}=B-\sum_{j=1}^{t}d_{j}$
1	$\$277$	$\$277$	900 – 277 = 623
2	221	498	900 – 498 = 402
3	166	664	900 – 664 = 236
4	111	775	900 – 775 = 125
5	55	830	900 – 830 = 70 = S

Question 11.3: Compute the SOYD depreciation schedule for the situation in ...