Perfect Weld buys a specialty table saw for its metal fabrication business on January 1, 2016. The machine cost $240,000 and is expected to be used for five years. At the end of the five years it is expected that the machine can be sold for $16,000.
Required: Compute the depreciation expense for the second year (2017) using both straight-line and double-declining-balance depreciation methods.
| Straight Line Method | $44,800 | ||||
| Double Declining Balance Method | $57,600 | ||||
| Straight Line Method | |||||
| Year | Depreciable Amount | Depreciation Rate | Depreciation Expense | Accumulated Depreciation | Book Value |
| 2016 | $224,000 | 20.00% | $44,800 | $44,800 | $195,200 |
| 2017 | $224,000 | 20.00% | $44,800 | $89,600 | $150,400 |
| Depreciation per year (240,000 - 16,000)/5 years = 44,800 | |||||
| Double Declining Balance Method | |||||
| Year | Depreciable Amount | Depreciation Rate | Depreciation Expense | Accumulated Depreciation | Book Value |
| 2016 | $240,000 | 40.00% | $96,000 | $96,000 | $144,000 |
| 2017 | $144,000 | 40.00% | $57,600 | $153,600 | $86,400 |
Get Answers For Free
Most questions answered within 1 hours.