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    This document shows the depreciation expense calculations for machinery over 3 years (2014-2016) using the double-declining balance and straight-line depreciation methods. Under the double-declining balance method, the depreciation expense decreases each year as the book value declines. Under the straight-line method, the depreciation expense is the same each year. Key figures provided include the cost of the machinery, accumulated depreciation, book value, and depreciation expense for each year under both methods.

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    This document shows the depreciation expense calculations for machinery over 3 years (2014-2016) using the double-declining balance and straight-line depreciation methods. Under the double-declining balance method, the depreciation expense decreases each year as the book value declines. Under the straight-line method, the depreciation expense is the same each year. Key figures provided include the cost of the machinery, accumulated depreciation, book value, and depreciation expense for each year under both methods.

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    61 views1 page

    Depreciation

    Uploaded by

    api-284614206
    This document shows the depreciation expense calculations for machinery over 3 years (2014-2016) using the double-declining balance and straight-line depreciation methods. Under the double-declining balance method, the depreciation expense decreases each year as the book value declines. Under the straight-line method, the depreciation expense is the same each year. Key figures provided include the cost of the machinery, accumulated depreciation, book value, and depreciation expense for each year under both methods.

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    of 1

    2014

    2015

    2016

    1. Double-declining-balance method
    Machinery
    Less:
    Accumulated
    depreciation
    Year-end book
    value
    Depreciation
    expense for the
    year

    $588,000
    $58,800

    $588,000
    =$58,800+
    $105,840=
    $164,640
    = $588,000 $164,640=
    $423,360
    $105,840

    $588,000
    =$58,800+$105,840+
    $164,640=
    = $249,312
    = $588,000 - $249,312 =
    $338,688

    $588,000
    ==$26,600+$53,200 +
    $79,800 = = $133,000

    $561,400

    $588,000
    =$26,600+
    $53,200 = =
    $79,800
    $508,200

    $26,600

    $53,200

    $53,200

    =$588,000 $58,800=
    $529,200
    $58,800

    $84,672

    2. Straight-line method
    Machinery
    Less:
    Accumulated
    depreciation
    Year-end book
    value
    Depreciation
    expense for the
    year

    $588,000
    $26,600

    $455,000

    1. Double-declining-balance rate = 2/ Estimated useful life = 2/10 =0.2 = 20%


    Depreciation Expense for 2014 = Double-declining-balance rate * Beginning
    period book value * Fraction of year = 20% *$588,000*6/12= $58,800
    Depreciation Expense for 2015 = 20%*($588,000-$58,800) = $105,840
    Depreciation Expense for 2016 = 20%*($588,000-$58,800 - $105,840) =
    $84,672
    2. Depreciation per year = (Cost Estimated residual value) / Estimated useful
    life in years = ($588,000 - $56,000) / 10 = $53,200 This amount is the
    depreciation amount for both 2015 and 2016 years.
    Depreciation for 2014 = Depreciation per year * Fraction of year =
    $53,200*(6/12) = $26,600

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