Please show all parts. 3. [NOTE: Cash flow diagram is not necessary for this pro

Question

Please show all parts.

3. [NOTE: Cash flow diagram is not necessary for this problem] Atlas Pressed Metals in Dubois, PA purchased new sintering equipment with an estimated useful life of 9 years. Cost of the furniture was $50,000 and the salvage value was estimated to be $3500 at the end of its useful like. a) (10 pts) For your company financial records, you use the double declining-balance depreciation method. What is the depreciation amount you would record in your company financial records for the 4h year of the asset's life? b) (7 pts) If instead you use the straight-line method of depreciation, what would be the depreciation amount you would record in you company financial records for the 4th year of the asset's life? How much depreciation would you record in the 9th year of the asset's life?

Explanation / Answer

a) Double decline method :

Straight line rate = 100/9 = 11.11%

Double decline rate = 11.11*2 = 22.22%

so depreciation amount under double declining balance depreciation method for the 4th year life is $5228

b) Straight line dep = (50000-3500)/9 = 5166.66

4th year dep = 5166.66

9th year dep = 5166.66

Year Deprciation expenses accumlated depreciation Book value 1 11111 11111 38889 2 8642 19753 30247 3 6722 26475 23525 4 5228

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