Question

On October 1, 2021, the Allegheny Corporation purchased equipment for $314,000. The estimated service life of the equipment is 10 years and the estimated residual value is $6,000. The equipment is expected to produce 550,000 units during its life.

Required:
Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

2. Double-declining balance

Answer 1

Ro Beginning of period Book value 314000 298300 Double Decline Depreciation Depreciation for the period Depreciation Partial Annual Rate Year Depreciation Expenses 3/12 15700 20% 12/12 59660 Annual period 2021 2022 End of Period Accumulated Year end Depreciation book value 15700 298300 75360 238640 20% Depreciation rate =( 1/ life of the machine)*2