Question

Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $80.000, and its estimated useful life is five years, after which the expected salvage value is $5,000, Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Round answers to the nearest whole number, when applicable. a. Straight-line Year 15 O Year 2$ 0 Year 35 0 Year 45 0 Year 55 0

Answer 1

Cost of the Machine 80000 Less : Salvage Value 5000 Depreciable Value of the Machine 750001 Life of the Machine Straight Line Method Annual Depreciation : Depreciable Value/Life annual Depreciation :75000/5 15000 Straight Line Method Depreciation Year Expenses Year 1 15000 Year 2 15000 Year 3 15000 Year 4 15000 Year 5 15000 Double Declining balance Method Rate of Depreciation = (1/ Life 2 Depreciation Rate = (1/5)2 40% Depreciation Double Declining balance Method Depreciation Year Expenses Year 1 32000 Year 2 19200 Year 3 11520 Year 4 10280 Year 5 2000

Double Declining balance Method Year Book Value Depreciation % 80000 40% 48000 40% 28800 40% 17280 40% 7000 40% Depreciation Book value 32000 19200 11520 10280 2000 48000 28800 17280 7000 5000