Asked by Ashton McGinn on May 12, 2024
Verified
A piece of equipment is purchased for $78,000 on January 1. It has a 5-year life and a salvage value of $8,000. Compute the annual depreciation expense using the double declining-balance method for all 5 years.
Salvage Value
The estimated residual value of an asset at the end of its useful life, which can be recovered through disposal.
Depreciation Expense
The distribution of a physical asset's cost throughout its lifespan.
Double Declining-Balance Method
An accelerated depreciation method that uses up to twice the straight-line rate multiplied with the book value of asset to calculate depreciation expense. Residual value is not subtracted from the cost of an asset in this calculation.
- Calculate the depreciation expense by leveraging the units-of-production method and supplementary techniques.
Verified Answer
DE
David EdwardsMay 15, 2024
Final Answer :
Year 1: $31,200 ($78,000 × .4)
Year 2: $18,720 ($46,800 × .4)
Year 3: $11,232 ($28,080 × .4)
Year 4: $6,739.20 ($16,848 × .4)
Year 5: $2,108.80 ($10,108.80 - $8,000)
Year 2: $18,720 ($46,800 × .4)
Year 3: $11,232 ($28,080 × .4)
Year 4: $6,739.20 ($16,848 × .4)
Year 5: $2,108.80 ($10,108.80 - $8,000)
Learning Objectives
- Calculate the depreciation expense by leveraging the units-of-production method and supplementary techniques.