Question

Case E. Matson Company purchased the following on January 1, 2016:      • Office equipment at...

Case E. Matson Company purchased the following on January 1, 2016:

    
• Office equipment at a cost of $42,000 with an estimated useful life to the company of three years and a residual value of $12,600. The company uses the double-declining-balance method of depreciation for the equipment.

• Factory equipment at an invoice price of $806,800 plus shipping costs of $22,000. The equipment has an estimated useful life of 112,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment.

• A patent at a cost of $360,000 with an estimated useful life of 10 years. The company uses the straight-line method of amortization for intangible assets with no residual value.  

The company's year ends on December 31.

1-a. Prepare a partial depreciation schedule of office equipment for 2016, 2017, and 2018. (Do not round intermediate calculations.)

(I just need the 2016,2017 and 2018 depreciation expense, accumulated depreciation, and netbook value)

Homework Answers

Answer #1

1-a)

Straight line depreciation = (Book value -Salvage value) / (Lifetime

= (42000-12600)/3

=9800

Straight line depreciation rate = Straight line depreciation*100/(Book value -Salvage value)

=33.333%

Depreciation under double-declining-balance method = 2* Straight line depreciation rate* Book value

Year

Beginning book value

Depreciation percent Depreciation amount

Accumulated depreciation

amount

Ending book

Value

2016 42000 66.67% 28000 28000 14000
2017 14000 10.00% 1400 29400 12600
2018 12600 0.00% 0 29400 12600

Accumulated depreciation = 29400

Last year book value = salvage value = 12600

Depreciation amount:

2016: $ 28000

2017:$ 1400

2018:$ 0

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