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Boscan Corporation purchased machinery on January 1, 2014, at a cost of $325,000

ID: 2466020 • Letter: B

Question

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $325,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $29,800. The company is considering different depreciation methods that could be used for financial reporting purposes.

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.)

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $325,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $29,800. The company is considering different depreciation methods that could be used for financial reporting purposes.

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $325,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $29,800. The company is considering different depreciation methods that could be used for financial reporting purposes. Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.

Explanation / Answer

Boscan Corporation Details Amt $/% Purchase cost of Machine Jan 1.2014.=           325,000.0 Less Residual value             29,800.0 Depreciable Value =           295,200.0 Useful life in years =                        4.0 SL Depreciation per year=             73,800.0 SL depreciation rate = 25% Double declining balance rate = 50% Depreciation Schedule Straight Line Depreciation End of Year Year Purchase cost   Annual Depreciation Expense Accumulated Depreciation Book Value     2,014.0                                                              325,000.0             73,800.0           73,800.0        251,200.0     2,015.0             73,800.0         147,600.0        177,400.0     2,016.0             73,800.0         221,400.0        103,600.0     2,017.0             73,800.0         295,200.0          29,800.0 Depreciation Schedule Straight Line Depreciation End of Year Year Book Value beginning of year Depreciation rate Depreciation Expense for the year Accumulated Depreciation Book Value     2,014.0                                                              325,000.0 50%         162,500.0        162,500.0       162,500.0     2,015.0                                                              162,500.0 50%           81,250.0        243,750.0         81,250.0     2,016.0                                                                 81,250.0 50%           40,625.0        284,375.0         40,625.0     2,017.0                                                                 40,625.0 50%           10,825.0        295,200.0         29,800.0

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