Question

Assignment 4 DUE ON August 2nd, 2020 (6% IN THE FINAL) PROBLEM:1 Roxy Gymnastics purchased new equipment for $175,000. It is estimated that the equipment will have a $15,000 residual value at the end of its 5-year useful service life. The double diminishing-balance method of depreciation will be used. Instructions: Prepare a depreciation schedule which shows the annual depreciation expense on the equipment for its 5 year life.

Answer 1

Preparation of Depreciation Schedule under Double Declining Balance Method. Purchase Price 175,000 Salvage Value 15,000 Useful Life 5.00 Years Depreciation Rate = (1/Useful Life in Years) * 2 = (1/5 Years) * 2 = 40%. Date Asset Cost Depreciation for the Year Depreciation Book Value DDB Rate Expense Accumulated Depreciation Book Value e DD $ 175,000 Purchase Year 1 Year 2 Year 3 Year 4 Year 5 $ 175,000 105,000 63,000 37,800 22,680 40% 40% 40% 40% 40% A A A A A 70,000 $ 42,000 $ 25,200 $ 15,120 $ 7,680 $ 70,000 $ 112,000 $ 137,200 $ 152,320 $ 160,000 $ 105,000 63,000 37,800 22,680 15,000