Question

Depreciation by Two Methods Equipment acquired at the beginning of the fiscal year at a cost...

Depreciation by Two Methods

Equipment acquired at the beginning of the fiscal year at a cost of $118,800 has an estimated residual value of $7,000 and an estimated useful life of 10 years.

a. Determine the amount of annual depreciation by the straight-line method.
$

b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method.

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Homework Answers

Answer #1

A) $11180

Explanation :

Straight line depreciation = (cost - salvage value)/ useful life

= (118800 - 7000)/10

=11180

2) straight line depreciation rate = 10%

Year Net book value,
beginning of year		 Double-declining
balance depreciation
computed as 2 × SL
rate × beginning NBV		 Net book value,
end of year
1 118800 23760 95040
2 95040 19008 76032

Therefore depreciation for

Year 1 = $23760

Year 2 = $19008

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