Question

Problem 9-9A Ayayai Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $24,000. The company is considering different depreciatian 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 Years Depreciable Cost Depreciation RateAnnual Depreciation Expense Accumulated Depreciation Book Value 2017 2018 2019 2020 DOUBLE-DECLINING-BALANCE DEPRECIATION Computation End of Year Years Book Value Beginning of Year x Depreciation RateAnnual Depreciation Expense Accumulated Depreciation Book Value 2017 2018 2019 2020 7,250 Depreciation expense for 2020 under Double declining-balance is adjusted so that ending book value is equal to salvage value. LINK TO TEXT LINK TO TEXT

Answer 1

1. Depreciation as per Straight Line Method Straight Line Depreciation Computation End of Year Values Years Depreciable Cost Depreciation Rate Annual Depreciation Expense Accumulated Depreciation Book Value 2017 $ 2,26,000.00 2018 $ 2,26,000.00 2019 2,26,000.00 2020 $ 2,26,000.00 25961 $ 25%| $ 25961 $ 25%| $ 56,500.00$ 56,500.00 $ 56,500.00 $ 56,500.00 56,500.00$ 1,93,500.00 1,13,000.00 $ 1,37,000.00 1,69,500.00$ 80,500.00 2,26,000.00$ 24,000.00 2,26,000.00 2. Depreciation as per Double Declining Balance Method Double Declining Balance Depreciation Computation End of Year Values Years Depreciable Cost Depreciation Rate Annual Depreciation Expense Accumulated Depreciation Book Value 2017 $ 2,50,000.00 2018 $ 1,25,000.00 2019 $ 62,500.00 2020$ 31,250.00 1,25,000.00 50%| $ 5096 | $ 50961 $ 50%| $ 62,500.00 S 31,250.00 S 7,250.00$ 1,25,000.00 $ 1,25,000.00 1,87,500.00$ 62,500.00 2,18,750.00$ 31,250.00 2,26,000.00$ 24,000.00 2,26,000.00 3. 4. Straight Line Method of depreciation will result higher reported income for 2017 Double Declining Balance Method of depreciation will result Lower reported income for 2017