Question

# Bridgeport Corp. purchased a boardroom table for \$ 17,600. The company planned to keep it for...

Bridgeport Corp. purchased a boardroom table for \$ 17,600. The company planned to keep it for four years, after which it was expected to be sold for \$ 920.

(a)

Calculate the depreciation expense for each of the first three years under the straight-line method and the double-diminishing-balance method, assuming the table was purchased early in the first month of the first year.

(1) Straight-line method.

 Year 1 \$ Year 2 \$ Year 3 \$

(2) Double-diminishing-balance method.

 Year 1 \$ Year 2 \$ Year 3 \$

Cost = \$17,600

Useful life = 4 years

Residual value = \$920

(a)

Depreciation each year under the Straight-line method = (Cost - Residual value) / Useful life

= (\$17,600 - \$920) / 4

= \$4,170

 Year 1 \$4,170 Year 2 \$4,170 Year 3 \$4,170

(2) Depreciation each year under Double-diminishing balance method = (Cost - Accumulated depreciation) / Useful life * 2

 Year 1 \$8,800 [(\$17,600-\$0)/4*2] Year 2 \$4,400 [(\$17,600-\$8,800)/4*2] Year 3 \$2,200 [(\$17,600-\$8,800-\$4,400)/4*2]

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