# Multiple Methods for Calculating Depreciation for Venus Company (Jessica Gardner Company)

Venus Company purchased a new piece of equipment on July 1, 2004 at a cost of \$600,000. The equipment has an estimated useful life of 5 years and an estimated salvage value of \$50,000. The current year end is 12/31/05. Venus records depreciation to the nearest month.

What is straight-line depreciation for 2005?
a. \$55,000.
b. \$60,000.
c. \$110,000.
d. \$120,000.

What is sum-of-the-years'-digits depreciation for 2005?
a. \$146,666.
b. \$165,000.
c. \$180,000.
d. \$183,333.

What is double-declining-balance depreciation for 2005?
a. \$144,000.
b. \$192,000.
c. \$220,000.
d. \$240,000.

If Venus expensed the total cost of the equipment at 7/1/04, what was the effect on 2004 and 2005 income before taxes, assuming Venus uses straight-line depreciation?
a. \$490,000 understated and \$110,000 overstated.
b. \$540,000 understated and \$60,000 overstated.
c. \$545,000 understated and \$110,000 overstated.
d. \$600,000 understated and \$60,000 overstated.

If, at the end of 2006, Venus Company decides the equipment still has five more years of life beyond 12/31/06, with a salvage value of \$50,000, what is straight-line depreciation for 2006? (Assume straight-line used in all years.)
a. \$60,000.
b. \$64,166.
c. \$72,500.
d. \$110,000.