Question
Asked Dec 6, 2019
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Can someone help me please

A Kubota tractor acquired on January 8 at a cost of $85,000 has an estimated useful life of 10 years. Assuming that it will have no residual value.

a.  Determine the depreciation for each of the first two years by the straight-line method.

First Year Second Year
$ $

b.  Determine the depreciation for each of the first two years by the double-declining-balance method.

First Year Second Year
$ $
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Expert Answer

Step 1

Depreciation refers to the amount of permanent loss in the value of an asset. It is reduction in the value of an asset which can be due to natural calamity, wear n tear, handling issues.

Under straight-line depreciation method, the rate of depreciation remains same in each year.

Under double-declining-balance method, the depreciation is charged on the book value at double the rate of depreciation calculated under straight-line method.

Step 2

Cost of tractor: $85,000

Useful life: 10 years

Salvage value: $0

a)

Depreciation per annum is calculated as follows:

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cost - salvage value Depreciation per annum = useful life $85, 000 – $0 10 $85,000 10 = $8,500

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Step 3

Depreciation under straight-line method remains same every year. Therefore, depreciation for two years will be $8,500 ...

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Rate of depriciation = (100% / useful life)x 2 = (100% /10)×2 =10%× 2 = 20%

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Depreciation Accounting

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