Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below.) On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Exercise 8-12 Double-declining-balance, partial-year depreciation LO C2 Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the double-declining- balance method. (Enter all amounts positive values.) End of Period Depreciation for the Period Beginning of Depreciation Partial Period Book Rate Year Value Annual Period Depreciation Expense Accumulated Depreciation Book Value 2016 2017 $ $ 0 0 $ $

Answer 1

depreciation rate = 100/ useful life x 2

= 100/5 x 2

= 40%

	depreciation for the period				end of period
annual period	beginning of period book value	Depreciation rate	partial year	Depreciation expense	accumulated depreciation	book value
2016	2,80,000	40%	9/12	84,000	84,000	1,96,000
2017	1,96,000	40%		86,800*	170,800	109,200

*Depreciation for the year 2017:

1/1/2017 to 31/3/2017

112,000 x 3/12 = 28,000

1/4/2017 to 31/12/2017

78,400 x 9/12 = 58,800

Total depreciation = 86,800