Question

Concord Corporation purchased machinery on January 1, 2022, at a cost of $286,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $33,600. The company is considering different depreciation methods that could be used for financial reporting purposes. Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.

Answer 1

Straight Line
Date	Cost of asset	Depreciable cost	Depreciable Rate	Depreciation expenses	Accumulated Depreciation	Book value
2022	$2,86,000	$2,52,400	25%	$63,100	$63,100	$2,22,900
2023	$2,86,000	$2,52,400	25%	$63,100	$1,26,200	$1,59,800
2024	$2,86,000	$2,52,400	25%	$63,100	$1,89,300	$96,700
2025	$2,86,000	$2,52,400	25%	$63,100	$2,52,400	$33,600
Double Declining balance
Date	Cost of asset	Book Value at beginning	DDB Rate	Depreciation expenses	Accumulated Depreciation	Book value
2022	$2,86,000	$2,86,000	50.00%	$1,43,000	$1,43,000	$1,43,000
2023	$2,86,000	$1,43,000	50.00%	$71,500	$2,14,500	$71,500
2024	$2,86,000	$71,500	50.00%	$35,750	$2,50,250	$35,750
2025	$2,86,000	$35,750	50.00%	$2,150	$2,52,400	$33,600
Since the Depreciation expenses under straight-Line method is lower hence it will result into higher income for 2022
Double Declining balance applying the same logic as above