Question

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)

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