Question

Computing Straight Line and Double Declining-Balance Depreciation On January 2, Reed Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $75.000, and its estimated useful life is five years, after which the expected salvage value is $5.000. For both parts cal and (b) below: (1) Compute depreciation expense for each year of the machine's five year useful life under that depreciation method. 2 Use the financial Statements effects template to show the effect of depreciation for the first year only for that method () Straight-line $ 14,000 per year Use negative signs with answers below, when appropriate Balance Sheet Income Statement Cash Ainet Transaction Record first year depreciation Nuncash Assets Assets 114.000 - Liabilities is . Contributed Capital Earned Capital (1400m 0 Revenue ov v 1694.000) Capital Expenses Revenue Expenses income (b) Double-declining Year Degreciation Expense 21 27.000 * TAZOO X 3,628.8 x Use negative signs with answers below. when appropriate Balance Sheet Income Statement Transaction Cash Asset Assets - Liabilities Contributed Capital Revenue Revenue . Expenses Net income E Check You have correctly selected 11 Marks for this sum

Answer 1

rate positively ..

Ans 1	Straight line depreciation =	(75000-5000)/5
				14000
	Transaction	Cash asset	non cash asset	liabilities	Contributed capital	Earned capital		Revenue	Expenses	Net income
	first year dep	0	-14000	0	0	-14000		0	14000	-14000
Ans 2	Double declining
	Year	Rate	Depreciation	Accumulated Depreciation	Book Value
	0		0	0	75000
	1	40%	30000	30000	45000
	2	40%	18000	48000	27000
	3	40%	10800	58800	16200
	4	40%	6480	65280	9720
	5	40%	4720	70000	5000
	Ans =
	Year	Depreciation
	1	30000
	2	18000
	3	10800
	4	6480
	5	4720
	Transaction	Cash asset	non cash asset	liabilities	Contributed capital	Earned capital		Revenue	Expenses	Net income
	first year dep	0	-30000	0	0	-30000		0	30000	-30000