A company bought a new machine for $17,000 on January 1. The machine is expected
ID: 2478478 • Letter: A
Question
A company bought a new machine for $17,000 on January 1. The machine is expected to last 4 years and has a residual value of $2,000. If the company uses the double declining –balance method, accumulated depreciation at the end of year 2 will be: A company bought a new machine for $17,000 on January 1. The machine is expected to last 4 years and has a residual value of $2,000. If the company uses the double declining –balance method, accumulated depreciation at the end of year 2 will be: A company bought a new machine for $17,000 on January 1. The machine is expected to last 4 years and has a residual value of $2,000. If the company uses the double declining –balance method, accumulated depreciation at the end of year 2 will be:Explanation / Answer
Dep % under Straight line Method= ¼ years =25%
Dep % under Double Declining Method Method= 2 x Dep % under Straight line Method= 2 x 25=50%
Double Declining Method
Year
Book Value of Beg yr
Dep Rate
=
Annual Dep
Accu Depr
Book Value
1
17,000
50
=
8,500
8,500
8,500
2
8,500
50
=
4,250
12,750
4,250
Accumulated Depreciation = $12,750
Double Declining Method
Year
Book Value of Beg yr
Dep Rate
=
Annual Dep
Accu Depr
Book Value
1
17,000
50
=
8,500
8,500
8,500
2
8,500
50
=
4,250
12,750
4,250
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