The Boxer Manufacturing Company\'s property records revealed the following plant

Question

The Boxer Manufacturing Company's property records revealed the following plant assets: information about its Accumulated Depreciation at the Machine No Beginning of Salvage Purchase Estimated Depreciation Life Method Value $5,000 $18,600 01/01/16 5 years Double declining Cost Date -06/01/1s i -4 years Straight-line $112,000$15,604 196,000 balance Required Calculate the depreciation expense for each machine for the year ended December 31, 20 Machine 1: Machine 2: (1) (2) Show the journal entry to record the depreciation expense for 2016 for machine #1. (3) Calculate the accumulated depreciation that would be shown on the balance sheet at Decembe 31, 2016 for Machine #1.

Explanation / Answer

1)

Depreciation under straight line method

= (Cost – Salvage value) / Useful life

So, depreciation for 2016

= ($112,000 - $5,000) / 4

= $ 26,750

Depreciation under double declining balance method

Double declining depreciation rate

= 1 / (Useful life) x 2

= 1 / 5 x 2

= 0.40 or 40%

Depreciation for 2016

= Book value at the beginning of the year x Depreciation rate

= $196,000 x 40%

= $ 78,400

2)

Journal Entry for depreciation for machine 1

Depreciation expense       $26,750

       Accumulated depreciation       $26,750

3)

Accumulated depreciation for machine 1

= Accumulated depreciation at the beginning of the year + Depreciation for the year

= $15,604 + $26,750

= $ 42,354

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