Question

Porter Inc. acquired a machine that cost $362,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $38.000 at the end of its life. Porter uses the calendar year for financial reporting. Depreciation expense for one-fourth of a year was recorded in 2019. Required: a. Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31, 2021, and the balance of the Accumulated Depreciation account as of December 31, 2021. (Note: This is the third calendar year in which the asset has been used.) Depreciation expense Accumulated depreciation b. Using the double-declining balance depreciation method, calculate the depreciation expense for the year ended December 31, 2021, and the net book value of the machine at that date. (Round Intermediate calculations.) Depreciation expense Net book value

Answer 1

The answer has been presented in the supporting shèet. For detailed answer refer to the supporting shèet.

Answer 2 3 Parta) 4 Depreciation expense for year ended December 31, 2021 5 = (cost - salvage value)/ life 6 = (362000-38000)/5 7 = $ 64800 9 Accumulated depreciation 10 = (cost - salvage value )* expired period / total period 11 = (362000-38000)*(3+12+12)/(5*12) 12 = 324000*27/60 13 = $ 145800 15 Thus the correct answer is 16 Depreciation expense 17 Accumulated Depreciation 64,800 1,45,800

9 Part b) o To calculate the requirement for part b we have to construct the table under double declining method till december 31,2021 Book Value Year Start Depreciation percentage Accumulated Depreciation expense depreictaion expense | Book value at year end book value * (beginning Acc. (362000-accumulated depreciation percentage Depreciation + current | depreciation depreciation) 36200 36200 325800 2 Year 2019 362000 my 10 10% (40%*3/12) 40% 40% 325800 2020 2021 130320 78192 166520 244712 195480 117288 195480 3 Note depreciation rate under Double declining method 9 = 2*1/life*100 0 = 2*1/5*100 1 - 40% 3 Thus the correct answer 4 Depreciation expense 5 Net Book Value 78192 117288