Question

Millco Inc., acquired a machine that cost $430,000 early in 2019. The machine is expected to last for tenth years, and its estimated salvage value at the end of its life is $63,000. Required: a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the accumulated depreciation after the fifth year of the machine's life. Depreciation expense Accumulated depreciation $ $ 36,700 183,500 b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense for the third year of the machine's life. Depreciation expense $ 55,040 c. What will be the net book value of the machine at the end of its tenth year of use before it is disposed of, under each depreciation method?

Answer 1

1.STRAIGHT LINE

=COST-SALVAGE/ USEFUL YEARS

430000-63000/10

=36700$ PER YEAR.

ACCUMULATED DEPRECIATION = 36700*5YEARS

=183500$

2. DOUBLE DECLINING RATE

=100/10

=10%*2

=20%

YEAR	BOOK VALUE	DEPRECIATION	ENDING BOOK VALUE
1	430000	86000[20%*430000]	344000
2	344000	68800	275200
3	275200	55040	220160
4	220160	44032	176128
5	176128	35226	140902
6	140902	28180	112722
7	112722	22544	90178
8	90178	18036	72142
9	72142	9142 (72142-63000)	63000
10		0

AS THE BOOK VALUE CANNOT FALL BEYOND THE SALVAGE VALUE, 9th year depreciation would be adjusted. and the depreciation for 10th year would be zero under double declining.

c . 10the year depreciation

double declining Answer $0