Just need help on part B.... Partial-Year Depreciation Equipment acquired at a c

Question

Just need help on part B....

Partial-Year Depreciation

Equipment acquired at a cost of $105,000 has an estimated residual value of $12,000 and an estimated useful life of 10 years. It was placed into service on May 1 of the current fiscal year, which ends on December 31.

a. Determine the depreciation for the current fiscal year and for the following fiscal year by the straight-line method.

b. Determine the depreciation for the current fiscal year and for the following fiscal year by the double-declining-balance method.

Depreciation Year 1 $ 6,200 Year 2 $ 9,300

Explanation / Answer

note: rate of depreciation under double declining depreciation = 2 (1 /life )*100

=>2*(1/10)*100

=>20%

b.

year 1 depreciation = $105,000 * 20% * 8/12 =>$14,000.

year 2 depreciation = depreciation on $105,000 for the first four months @20%

=>$105,000 * 20% *4/12 =>$7,000.

and also 20% on balance in machinery account for 8 months.

balance=>$105,000 - $14,000 - $7,000 =>$84,000.

depreciation = $84,000 * 20% *8/12 =>11,200.

tota depreciation in year 2 = $7,000 +11,200 =>$18,200.

Depreciation Year 1 $14,000 Year 2 $18,200

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