Question

View Policies Current Attempt in Progress Sarasota Corporation purchased machinery on January 1, 2022, at a cost of $280,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $33,000. 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. STRAIGHT-LINE DEPRECIATION Computation End of Year ars Depreciable Cost X Depreciation Rate - Annual Depreciation Expense Accumulated Depreciation Book Vali DOUBLE-DECLINING-BALANCE DEPRECIATION Computation End of Year

Answer 1

A) Depreciation with Straight Line Method

Annual depreciation Expense = (Cost of Asset- Salvage Value) / Useful life of asset

= (280000 – 33000) / 4

= 61750

Straight line depreciation rate = Annual Depreciation Cost / (Cost of Asset)

= 61750/(280000) = 22.05357%

	Depreciable cost	Depreciation Rate	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2022	$     2,80,000	22.05357%	$                     61,750	$            61,750	$     2,18,250
2023	$     2,80,000	22.05357%	$                     61,750	$        1,23,500	$     1,56,500
2024	$     2,80,000	22.05357%	$                     61,750	$        1,85,250	$         94,750
2025	$     2,80,000	22.05357%	$                     61,750	$        2,47,000	$         33,000
			$                  2,47,000

B) Depreciation under Double Declining Method

Year	Book Value Begning of Year	Depreciation Rate	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2022	$                 2,80,000	50.00%	$                      1,40,000	$        1,40,000	$     1,40,000
2023	$                 1,40,000	50.00%	$                         70,000	$        2,10,000	$         70,000
2024	$                     70,000	50.00%	$                         35,000	$        2,45,000	$         35,000
2025	$                     35,000	50.00%	$                            2,000	$        2,47,000	$         33,000
			$                      2,47,000