On April 30, 2018, Quality Appliances purchased equipment for $256,000. The esti

ID: 2597052 • Letter: O

Question

On April 30, 2018, Quality Appliances purchased equipment for $256,000. The estimated service life of the equipment is six years and the estimated residual value is $22,000. Quality's fiscal year ends on December 31. Required: Calculate depreciation for 2018 and 2019 using each of the three methods listed. Quality calculates partial year depreciation based on the number of months the asset is in service. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.) How to calculate double-decling balance for 2018 and 2019?

Explanation / Answer

Purchase price of equipment = 256000

Estimated life of equipment = 6 years

Double declining rate = (100/6) *2 = 33.33%

Depreciation for the year 2018 = 256000*33.33%*8/12 = 56883.20

Year

Annual depreciation

Accumulated Depreciation

Book Value

2018

56883.20

256000 - 56883.20

= 199116.80

2019

256000*33.33% = 85324.80

56883.20 + 85324.80= 142208

256000 – 142208 =

113792