Question

22. The cost of an asset is $1,110,000, and its residual value is $300,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation (room on next page). A) $222,000 B) $162,000 C) $266,400 D) $324,000

23. If an asset is disposed of when it is fully depreciated and has no residual value, the business does not need to make a journal entry because the book value is zero. TRUE FALSE

Answer 1

Q22.
Answer is C. $ 266400
Explanation:
Cost of Assets				1,110,000
Rate of dep on SLM (100/5)				20%
Rate of Dep on DDB (20%*2)				40%
Depreciation in Year-1 (1110,000*40%)				444000
Book Value at the end of Year-1				666,000
Depreciation in Year-2 (666000*40%)				266400
Book value at the end of Year-2				399,600
Q23.
False.
Explanation:
The entry to close the assets account and Accumulated depreciation account need to be passed by debiting the accumulated depreciation account and crediting the Assets account.