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Question

Problem 9-8A

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STRAIGHT-LINE DEPRECIATION

Computation

End of Year

Years

Depreciable Cost

Depreciation Rate

Annual Depreciation Expense

Accumulated Depreciation

Book Value

DOUBLE-DECLINING-BALANCE DEPRECIATION

Computation

End of Year

Years

Book Value Beginning of Year

Depreciation Rate

Annual Depreciation Expense

Accumulated Depreciation

Book Value

2,050

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Problem 9-8A

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $29,200. The company is considering different depreciation methods that could be used for financial reporting purposes.

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Explanation / Answer

Depreciation = (250000-29200)/4 55200 Depreciation Rate 55200/220800 0.25 Straight Line Depreciation Years Depreciable X Depreciation = Annual Accumulated Book Value Cost Rate Dep Dep Expense 2014 220800 25% 55200 55200 194800 2015 220800 25% 55200 110400 139600 2016 220800 25% 55200 165600 84400 2017 220800 25% 55200 220800 29200 Double Declining 25%*2 = 50% Years Depreciable X Depreciation = Annual Accumulated Book Value Cost Rate Dep Dep Expense 2014 220800 50% 110400 110400 139600 2015 110400 50% 55200 165600 84400 2016 55200 50% 27600 193200 56800 2017 27600 50% 27200 220400 29600

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