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Acme Corp purchased a new machine that is expected to be used in manufacturing for 10...

Acme Corp purchased a new machine that is expected to be used in manufacturing for 10 years for $60,000. The salvage value of the machine after 10 years is $3000. Assume the machine was purchased on the first day of the fiscal year so no partial year depreciation is needed. Using the Double Declining Balance Depreciation Method, what is the Accumulated Depreciation Value at the end of year 3? Adapted from table on page 82 Chapter 10

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In Double declining method Depreciation-2* Straight-line Depn %*Book Value at the beginning of the Period. First we will calculate straight line Depreciation %-60000-3000/10-5700 i.e 10% At the End of 1st year depreciation will be =2*0.10*60000=12000. so Book value at the beginning of the year 60000-12000-48000 At the End of 2nd year depreciation will be -2*0.10*48000-96000 SO Book value at the beginning of the year-48000-9600-38400 At the End of 3rd year depreciation will be =2*0.10*38400-7680. SO Book value at the beginning of the year 38400-7680 30720 So Accumulated Depreciation at the end of 3rd year is 12000+9600+7680 29280

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