Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost
ID: 2479755 • Letter: B
Question
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: $36,000 $90,000 $54,000 $16,000 $42,000 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: $36,000 $90,000 $54,000 $16,000 $42,000 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: $36,000 $90,000 $54,000 $16,000 $42,000Explanation / Answer
Calculation of asset's book value on December 31, Year 2:
(Using double-declining-balance method of Depreciation)
Depreciation formula : Previous Year Book Value * Depreciation Rate
Depreciation rate = 2 / Life = 2/5 = 40%
Cost of the asset as on October 1, Year 1
$ 100,000
Depreciation till November 30, year 2 = (100000*40%)=
$ 40,000
Book Value as on October 1, Year 2 =(100000-40000)
$ 60,000
Depreciation From October 1, Year 2 till December 31, year 2 (3 months ) = (60000*40%*3/12)=
$ 6,000
Book Value as on December 31, Year 2 =(60000-6000) =
$ 54,000
Calculation of asset's book value on December 31, Year 2:
(Using double-declining-balance method of Depreciation)
Depreciation formula : Previous Year Book Value * Depreciation Rate
Depreciation rate = 2 / Life = 2/5 = 40%
Cost of the asset as on October 1, Year 1
$ 100,000
Depreciation till November 30, year 2 = (100000*40%)=
$ 40,000
Book Value as on October 1, Year 2 =(100000-40000)
$ 60,000
Depreciation From October 1, Year 2 till December 31, year 2 (3 months ) = (60000*40%*3/12)=
$ 6,000
Book Value as on December 31, Year 2 =(60000-6000) =
$ 54,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.