Boscan Corporation purchased machinery on January 1, 2014, at a cost of $333,000

Question

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $333,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $28,400. The company is considering different depreciation methods that could be used for financial reporting purposes.

(a) Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. (Round answers to 0 decimal places, e.g. 125.)

Explanation / Answer

Depreciation as per straight line method = (333000-28400)/4 = 76150

Depreciation as per Declining Balance Method :

Year Net book value,beginning of year Double-declining bal­ance depreciation computed as 2 × SL Net book value, rate × beginning NBV end of year 1 $333,333 $166,666.50 $166,667 2 $166,667 83,333 83,333 3 83,333 41,667 41,667 4 41,667 20,833 20,833

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