Question

Porter Inc, acquired a machine that cost $373,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $45,000 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: o. 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.) Deprecation expense

Answer 1

a.	Depreciation expense	$65,600
	Accumulated depreciation	$147,600
b.	Depreciation expense	$80,568
	Accumulated depreciation	$252,148
	Working
	Straight Line Method
	Year	Depreciable cost	Depreciation Life	Depreciation Exp.	Acc. Dep
	2019	$373,000	5	$16,400	$16,400
	2020	$373,000	5	$65,600	$82,000
	2021	$373,000	5	$65,600	$147,600
	Depreciation per year (373,000 - 45,000)/5 years = 65,600
	Depreciation for 2019 = $65,600 x 3/12
	Double Declining Balance Method
	Year	Book Value year start	Depreciation Rate	Depreciation Exp.	Acc. Dep
	2019	$373,000	10.00%	$37,300	$37,300
	2020	$335,700	40.00%	$134,280	$171,580
	2021	$201,420	40.00%	$80,568	$252,148