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(13 Points) The cost of an asset is $1,180,000, and its residual value is $220,000. Estimated useful life of the asset is ten years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate nearest dollar.) caiculations, and round your final answer to the Select one: O a. $118,000 O b. $192,000 O c. $96,000 O d. $188,800 (19 Points) Caterpillars, Inc, a manufacturing company, acquired equipment on January 1, 2014 for $58 0,000. Estimated useful life of the equipment was seven years and the estimated residual value was $12,000. On January 1, 2017, after using the equipment for three years, the total estimated useful life
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Ans 2/Useful Life* Book Value Double Declining Balance Method (DDBM) Cost Residual Value Useful Life (Year $1,180,000 $220,000 10 Opening Depreciation Computation Depreciation Closing Book Book value Year fraction Expense C) (A) X (B) Value Al (C $1,180,000 $1,180,0002/10 [$1180000 x 2/10$236,000944,000 $944,000 2/10 I$944000 x 2/10] $188,800 $755,200 $755,2002/10 [$755200 x 2/10] $151,040$604,160 $604,160 2/10 [$604160 x 2/10] $120,832 $483,328 96,666$386,662 77,332 $309,330 $61,866$247,464 27,464 $220,000 $O $220,000 SO$220,000 Note Depreciation for the 8th Year is restricted to $27464 instead of $ 49492 so as to 0 $1,180,000 4 $483,3282/10 [$483328 x 2/10] $386,6622/10 [S386662 x 2/10] S309,3302/10 [$309330 x 2/10] $247,4642/10 Refer Note $220,000 2/10 $220,0002/10 10 bring the Book Value to its residual value i.e $220000 Option (d) i.e $188,800 is the correct answer

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