Question

Koffman’s Warehouse purchased a forklift on January 1, 2016, for $90,000. The forklift is expected to last for five years and have a residual value of $9,000. Koffman’s uses the doubledeclining- balance method for depreciation.

Required:

1.	Calculate the depreciation expense, accumulated depreciation, and book value for each year of the forklift’s life.
2.	Prepare the journal entry to record depreciation expense for 2016.
3.	Refer to Exhibit 8-2. What factors may have influenced Koffman to use the double-declining balance method?

Refer to Exhibit 8-2. What factors may have influenced Koffman to use the double-declining balance method?

Koffman may believe that the double-declining-balance method best   of the asset with the revenues produced by the asset. Koffman may also choose this method because it allows     depreciation to be taken in the early years of the asset life and thus     taxes until the later years.

Answer 1

Attached are images of two excel sheets, one with the solution and the other showcasing the formulas used.