A machine costing $145,800 is purchased on May 1, 2016. The machine is expected to be obsolete after three years (36 months) and thereafter, no longer useful to the company. The estimated salvage value is $54,00. Compute depreciation expenses for both 2016 and 2017 under each of the following depreciation methods: a. Straight line 2016 & 2017b. Double declining balance 2016 & 2017

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Asked Nov 21, 2019
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A machine costing $145,800 is purchased on May 1, 2016. The machine is expected to be obsolete after three years (36 months) and thereafter, no longer useful to the company. The estimated salvage value is $54,00. Compute depreciation expenses for both 2016 and 2017 under each of the following depreciation methods:
a. Straight line 2016 & 2017
b. Double declining balance 2016 & 2017

 

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Expert Answer

Step 1

Requirement A:

Calculate the depreciation expense for 2016 using straight line method:

Cost -Salvage value
x Number of months
Depreciation expense
Life
$145,800- $5,400
x 8months
36months
S31.200
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Cost -Salvage value x Number of months Depreciation expense Life $145,800- $5,400 x 8months 36months S31.200

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Step 2

Calculate the depreciation expense for 2017 using straight line method:

Cost -Salvage value
x Number of months
Depreciation expense
Life
$145,800- $5,400
x 12months
36months
$46,800
help_outline

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Cost -Salvage value x Number of months Depreciation expense Life $145,800- $5,400 x 12months 36months $46,800

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Step 3

Requirement B:

Calculate the depreciation expense for 2016 usin...

Depreciation expense (2x straight line depreciation percent x book value at begining)
2x22.22%x $145, 800
$64,800
help_outline

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Depreciation expense (2x straight line depreciation percent x book value at begining) 2x22.22%x $145, 800 $64,800

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