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Computing deprecitation under straight-line and double-declining-balance for partial years :- a machiene costign $145,800 is purchased...

Computing deprecitation under straight-line and double-declining-balance for partial years :-

a machiene costign $145,800 is purchased on May 1,2016. The machiene is expected to be obsolete after three years (36 months) and, thereafter, no longer useful to the company. The estimated salvage value is $5,400. computre depreciation expense for both 2016 and 2017 under each of the following depreciation methods :

1) straight-line

2) double-declining-balance

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Answer #1

1.

Straight line method:

Assuming the year ends on 31st december so,

for 2016:

Cost =$145800

Year= 3

Salvage value= 5400

Depreciation for 2016 for 7months from June 2016 to december 2016= (145800-5400)/3*7/12= $27300

Depreciation for 2017=   (145800-5400)/3= $46800

Double declining method:

Cost on May 2016

Depreciation percentage= (145800-5400)/3= $46800

=46800/145800*100= 32.10%

Depreciation for the year 2016= 145800*32.1%*7/12= $27300

WDV on 31st December 2016= $145800-$27300= $118500

Depreciation for 2017= $ 118500*32.1%=$38039

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