Question

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.

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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