Chapter 17, Problem 9AT

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Award Makers bought a computerized engraving machine for $33,800. It is expected to have a 5-year useful life and a trade-in value of $2,700. Prepare a depreciation schedule for the *first three years* by using the 150% declining-balance method for the machine.

**Award Makers**

**150% Declining-Balance Depreciation Schedule Computerized Engraving Machine**

End of |
Beginning |
Depreciation |
Depreciation |
Accumulated |
Ending |
||||

Year |
Book Value |
Rate |
for the Year |
Depreciation |
Book Value |
||||

1 | |||||||||

2 | |||||||||

3 |

To determine

**To calculate:** The depreciation schedule for Award Maker’s machine using 150% declining balance method when the total cost of machine is

Explanation

**Given Information:**

The total cost of machine is

**Formula used:**

The steps to prepare depreciation schedule by the declining balance method are as follows:

Step 1: Calculate the declining balance rate by the below formula

Step 2: Calculate the depreciation for each year by multiplying beginning book value by declining balance rate.

Step 3: Calculate the ending book value by subtracting depreciation of the year from the beginning book value.

Step 3: The depreciation is complete when the ending book value equals the salvage value.

Step 4: Prepare the depreciation schedule in form of chart.

**Calculation:**

Consider the total cost of machine is

The declining-balance rate is:

Now, using the above formula, the declining-balance rate is:

The depreciation for the year is:

Now, using the above formula, the depreciation for 1^{st} year is:

The ending book value is:

Now, using the above formula, the ending book value for 1^{st} year is:

Now, using the above formula, the depreciation for 2^{nd} year is:

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