Question

3.-Equipment acquired at the beginning of the year at a estimated residual value of $5,000 and an estimated useful life 125,000 the (a) annual straight-line depreciation, (b) double-declinin double-declining balance depreciation for every year and entry to record the first year's depreciation. (23 percent) ul life of 5 years. Determine rate, and (e journalize the adjusting

Answer 1

Answer:

(1)

Depreciation as per straight liner

=Cost- salvage value/ life of assets

=(125,000-5000) /5 year

=120,000 /5

=$24,000 depreciation each year

Date	Account Titles and Explanation	Debit $	Credit $
first year	Depreciation expanses-Equipment	24000
	Accumulated depreciation-Equipment		24000
	(to record the depreciation of the first year as per straight line method)

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(2)

Double Declining balance rate

=Straight line rate x 2

=(100/5) x 2

=20x2

=40%

Double Declining balance rate =40%

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(3)

Year	Initial balance	Rate	Depreciation for the year	Accumulated Depreciation	Ending balance of assets
0					125,000
1	125,000	40%	50000	50000	75,000
2	75,000	40%	30000	80000	45,000
3	45,000	40%	18000	98000	27,000
4	27,000	40%	10800	108800	16,200
5	16,200	40%	11200	120000	5,000

Year	Depreciation for the year
1	50000
2	30000
3	18000
4	10800
5	11200

Note:

Depreciation of 5th year is adjusted to the balance of 5000 as its salvage value

Date	Account Titles and Explanation	Debit $	Credit $
first year	Depreciation expanses-Equipment	50000
	Accumulated depreciation-Equipment		50000
	(to record the depreciation of the first year as per double declining balance method)