Depreciation Methods A machine costing $181,800 was purchased May 1. The machine

Question

Depreciation Methods A machine costing $181,800 was purchased May 1. The machine should be obsolete after three years and, therefore, no longer useful to the company. The estimated salvage value is $5,400. Calculate the depreciation expense for each year of its expected useful life using each of the following depreciation methods: (a) straight-line, (b) double-declining balance. For double-declining balance, do not round until your final answer. Round your final answers to the nearest dollar. a. Straight-line: Year 1: 39,200 58,800 58,800 Year 2: Year 3: Year 4: 19,600 b. Double-declining balance: Year 1: $ 50,495 x Year 2: Year 3: 0 x Year 4: Check

Explanation / Answer

Double decline dep :

Year 1 = 181800*2/3*8/12 = 80800

Year 2 = 181800*2/3*4/12+181800*1/3*2/3*8/12 = 67333

Year 3 = 181800*1/3*2/3*4/12+181800*1/3*1/3*2/3*8/12 = 22444

Year 4 = 5823

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