1- Machinery was purchased on January 1 for $71,050.00. The machinery has an est
ID: 2519645 • Letter: 1
Question
1- Machinery was purchased on January 1 for $71,050.00. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year would be (round calculations to the nearest dollar):
a. $15,500
b. $14,500
c. $14,000
d. $13,500
2- If a fixed asset, such as a computer, were purchased on January 1 for $2,179 with an estimated life of 7 years and a salvage or residual value of $114, the journal entry for monthly expense under straight-line depreciation is
a.
b.
c.
d.
Accumulated Depreciation 24.58 Depreciation Expense 24.58Explanation / Answer
1.
Cost = 71,050
Estimated life = 7 years
Depreciation under double declining balance method = (cost - accumulated depreciation) / useful life * 2
Depreciation in the first year = (71,050 - 0) / 7 * 2 = 20,300
Depreciation in the second year = (71,050 - 20,300) / 7 * 2 = 14,500
The answer is B.
2.
Cost = 2,179
Estimated life = 7 years
Salvage value = 114
Depreciation under Straight line method = (cost - salvage value) / estimated life
= (2,179 - 114) / 7
= 295
Journal entry
The answer is B.
Depreciation expense 295 Accumulated deprecitaion 295Related Questions
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