Question

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $5,654,500. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $47,140.

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense. (Adjust year 9 depreciation, if necessary, so that the total depreciation expense equals depreciable value of the asset. Do not round intermediate calculations and round your final answers to the nearest whole number.)

Year 1 200% Declining- Balance (Half-Year Convention) $ 706,813 1,236,922 927,691 695,769 521,826 391,370 0X Totals $ 4,480,391

Answer 1

Year	200% Declining-Balance
1	$706,813
2	$1,236,922
3	$927,691
4	$695,769
5	$521,826
6	$391,370
7	$375,656	(1,174,109 - 47,140) / 3 years depreciation remaining
8	$375,656
9	$375,657
Totals	$5,607,360