Depreciation by Two Methods A storage tank acquired at the beginning of the fisc

Question

Depreciation by Two Methods A storage tank acquired at the beginning of the fiscal year at a cost of $80,000 has an estimated residual value of $4,000 and an estimated useful life of 20 years. a. Determine the amount of annual depreiation by the straight-line method. b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollan Year 1 Year 2

Explanation / Answer

a.Annual depreciation=(Cost-Salvage value)/Useful life

=(80000-4000)/20=$3800

b.Depreciation rate as per straight line method=(100/20)=5%/year

Hence depreciation as per double decline balance method=2*Depreciation rate as per straight line method*Beginning value of each period

Year Beginning value Depreciation Ending value 1 80000 (2*5*%*80000)=$8000. (80000-8000)=$72000 2 72000 (2*5*%*72000)=$7200.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.