Homework Answers
| Part 1 | |||||
| Cost of Plant & Equipment acquired on 1/1/2015 =$95,000 | |||||
| Life of Plant & Equipment =$9,500/ $95,000 =10 Years | |||||
| Depreciation rate as per Double declining balance method =1/10 Years =10%*2 =20% | |||||
| So the Rate as per Double declining balance method is 20% | |||||
| Here is the depreciation schedule for Plant and equipment: | |||||
| Date | Book Value | DDB Rate | Depreciation expenses | Accumulated Depreciation | Book value |
| 2015 | $95,000 | 20.00% | $19,000 | $19,000 | $76,000 |
| 2016 | $76,000 | 20.00% | $15,200 | $34,200 | $60,800 |
| 2017 | $60,800 | 20.00% | $12,160 | $46,360 | $48,640 |
| 2018 | $48,640 | 20.00% | $9,728 | $56,088 | $38,912 |
| Part 2 | |||||
| Depreciation as per Straight Line method for 3 Years =$9,500*3 =$27,500 | |||||
| Depreciation as per Double declining balance method for 3 Years =$19,000+$15,200+$12,160 =$46,360 | |||||
| Since the Depreciation as per Double declining balance is more than Straight Line method by $18,860($46,360-$27,500). | |||||
| That additional amount of $18,860 would be charged to depreciation expenses along with the depreciation expense of 2018 for $9,728 | |||||
| So total amount to be charged as depreciatioin expense in 2018 is $28,588 | |||||
| So the Journal entry will be: | |||||
| Dec 31,2018 | Depreciation expense-Plant & Equipment | $28,588 | |||
| Accumulated Depreciatioin-Plant & Equipment | $28,588 | ||||
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