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.

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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