Depreciation calculation methods-partial year Freedom Co. purchased a new machine on July 2, 2013, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000.

a. Calculate the depreciation expense for each year of the asset's life using:

1. Straight-line depreciation.

2. Double-declining-balance depreciation.

3. 150% declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2013, under each of the three methods? (Note: The machine will have been used for one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2014, under each of the three methods.

Question

Johan Bautista

Business

29 July, 06:49

Depreciation calculation methods-partial year Freedom Co. purchased a new machine on July 2, 2013, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000.

a. Calculate the depreciation expense for each year of the asset's life using:

1. Straight-line depreciation.

2. Double-declining-balance depreciation.

3. 150% declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2013, under each of the three methods? (Note: The machine will have been used for one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2014, under each of the three methods.

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Answers (1)

Know the Answer?

Raquel Watkins · Answer 1

a.

1. $7,600

2. $17,600

3. $13,200

b.

1. $3,800

2. $8,800

3. $6,600

c.

1. $15200

2. $35,200

3. $26,400

Explanation:

1. Straight Line Depreciation Method

$44,000 - $6,000 / 5 years

= $7,600.

2. Double declining - balance Method

100% / 5 years = 20%

20% * 2 = 40%

$44,000 * 40% = $17,600

3. 150% declining - balance Method

150% / 5 years = 30%

$44,000 * 30% = $13,200

b. Because this is for 6 months only the depreciation expense calculated will be divided into 2

1. $7,600 / 2 = $3,800

2. $17,600 / 2 = $8,800

3. $13,200 / 2 = $6,600

c.

1. $7,600 * 2 = $15200

2. $17,600 * 2 = $35,200

3. $13,200 * 2 = $26,400