Question

Required information

[The following information applies to the questions displayed below.]

At the beginning of 2018, Copeland Drugstore purchased a new computer system for $210,000. It is expected to have a five-year life and a $30,000 salvage value.

Required

1. Compute the depreciation for each of the five years, assuming that the company uses

1. (1) Straight-line depreciation.

   $

1. (2) Double-declining-balance depreciation. (Leave no cells blank - be certain to enter "0" wherever required.)

	Double-Declining Balance
Year 1	$
Year 2	$
Year 3	$
Year 4	$
Year 5	$

Answer 1

1. Annual depreciation (Straight-line depreciation) = (cost - salvage value) / life of the asssets

= ($210000 - $30000)/ 5 years

= $36,000

2.

Double declining depreciation rate = Straight line depreciation rate x 2

= (100/5 years) x 2

= 40%

	Double-Declining Balance
Year 1	$210000*40% = $84,000
Year 2	(210000-84000)*40% = $50400
Year 3	(210000-84000-50400)*40% = $30240
Year 4	(210000-84000-50400-30240)*40% = $18144
Year 5	(210000-84000-50400-30240-18144)*40% = $10,886.40