Question

An asset was purchased for $60,000. It has a 6 year life. The asset is expected to have a salvage value of $7000 after the six years. Show the depreciation and remaining book value for this asset for each of the 6 years using Double Declining Balance depreciation. (Chapter 11). (Be careful not to have book value go below salvage value).

Answer #1

Time = 6years

Depreciation Base = Purchase value - Salvage value

Depreciation Base = 60000 - 7000 = 53000

Depretiation expense = 53000/6 = 8833.33

Straight line depreciation =[ 8833.33/53000] x 100 = 16.67%

Double declining depreciation = 16.67x2 = 33.34%

year | Depreciation rate | Starting carrying value | Depreciation expense | End Carrying value |

1 | 33.34% | 60000 | 20004 | 39996 |

2 | 33.34% | 39996 | 13334.67 | 26661.33 |

3 | 33.34% | 26661.33 | 8888.89 | 17772.44 |

4 | 33.34% | 17772.44 | 5925.33 | 11847.11 |

5 | 33.34% | 11847.11 | 3949.83 | 7897.28 |

6 | 33.34% | 7897.28 | 2632.95 | 5264.33 |

A depreciable asset is purchased for $50,000. The expected
salvage value is zero at the end of it’s 8 year useful life.
Compute the depreciation schedule by using double declining balance
(DDB) to switch over straight line depreciation. Also, determine
the book value of the asset after 6 years.

An asset is purchased on January 1 at a cost of $25,000. It is
expected to be used for four years and have a salvage value of
$1,000. Calculate the depreciation expense for each year of the
asset's useful life under each of the following methods:
(Show
Work)
Straight-line method
Double-declining-balance method
Sum-of-the-years-digits' method

A machine, purchased for $60,000 had a depreciable life of 4
years. It will have an expected salvage value of $10,000 at the end
of the depreciable life. What is the difference (in absolute value)
in the book value at the end of year 2 between the straight line
and double declining methods? (Report your answer in
dollar amounts without any extra character. Answers such as
2Million; 2M; 2,000,000 or $2000000 are not acceptable)

Exercise 1 from our first class period discussing Chapter 11
noted the following information:
On January 7, 2017, Barker Company
purchased equipment for $350,000. Estimated residual value at the
end of an estimated six-year service life is $50,000.
Depreciation in that exercise was
calculated for two years using the following methods:
Straight-line, with a net balance of $250,000 after 2018
Sum-of-the-years’-digits, with a net balance of $192,857 after
2018
Double-declining balance, with a net balance of $155,555 after
2018
Note:...

An asset will cost $1,750 when purchased this year. It is
further expected to have a salvage value of $250 at the end of its
five year depreciable life. Calculate complete depreciation
schedules giving the depreciation charge, D(n), and
end-of-year book value, B(n), for straight-line (SL), Declining
Balance (DB) with a rate of d=0.25, double declining balance (DDB),
and modified accelerated cost recovery (MACRS) depreciation
methods. Assume a MACRS recovery period of 5 years with the
following depreciation rates.
Year...

Deuce Company purchased a truck for $80,000 on January 1,
2018. The asset has an expected salvage value of
$8,000 at the end of its five-year useful life.
Calculate depreciation expense in 2019
(the second year) under:
Straight-line depreciation? (2 points)
Double-declining balance depreciation? (3 points)
Sum-of-years digits depreciation? (3 points)

At
the beginning of 2016, Copland Drugstore purchased a new computer
system for $52000. It is expected to have a five-year life and a
$7000 salvage value.
Find the double-declining-balance depreciation for years
1-5.

On January 1, 2016, Sparks Company purchased for $360,000
snow-making equipment having an estimated useful life of 8 years
with an estimated salvage value of $25,000 and 500,000 units
expected to be produced. Depreciation is taken for the portion of
the year the asset is used.
(a) Complete the form below by determining the depreciation
expense and year-end book values of 2015 and 2016 using the
1. Straight Line Method
2. Production assuming 50,000 units produced in 2016 and 60,000...

Beckman Enterprises purchased a depreciable asset on October
1, Year 1 at a cost of $100,000. The asset is expected to have a
salvage value of $20,000 at the end of its five-year useful life.
If the asset is depreciated on the double-declining-balance method,
the asset's book value on December 31, Year 2 will be:
Select one:
a. $54,000
b. $16,000
c. $42,000
d. $36,000

Colvin Enterprises purchased a depreciable asset on October 1,
Year 1 at a cost of $100,000. The asset is expected to have a
salvage value of $20,000 at the end of its five-year useful life.
If the asset is depreciated on the double-declining-balance method,
the asset’s depreciation expense in Year 2 will be:
A) 90000
B) 54000
C) 42000
D) 16000
E) 36000

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