Foster Corporation purchased a new machine for its assembly process on August 1, 2020. The cost of this machine was $235,800. The company estimated that the machine would have a trade-in value of $25,800 at the end of its service life. Its life is estimated at 10 years, and its working hours are estimated at 42,000 hours. Year-end is December 31.Compute and record the depreciation expense using the double declining balance method for 2022

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Asked Nov 3, 2019
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Foster Corporation purchased a new machine for its assembly process on August 1, 2020. The cost of this machine was $235,800. The company estimated that the machine would have a trade-in value of $25,800 at the end of its service life. Its life is estimated at 10 years, and its working hours are estimated at 42,000 hours. Year-end is December 31.

Compute and record the depreciation expense using the double declining balance method for 2022

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Expert Answer

Step 1

Compute straight-line depreciation rate.

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1 Straight-line depreciation rate Useful life 10 -10% or 0.10

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Step 2

Compute declining balance rate.

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Declining balance rate = (2 x Straight-line depreciation rate) =2x10% =20%

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Step 3

Compute depreciation for 2...

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Declining balance rate Depreciaition 5 xMachine cost x 12 X 5 20%x $235,800 x. 12 $19,650

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