1. Doblin Corp. purchased equipment on January 1, 2016 for $264,500. Doblin management estimated the useful...
1. Doblin Corp. purchased equipment on January 1, 2016 for $264,500. Doblin management estimated the useful life of the machine to be 10 years with a salvage value of $11,500. Under the straight-line method of depreciation, the book value of the machine at December 31, 2020 will be (round to the nearest dollar) :
a.
$23,500
b. $11,500
c. $112,700
d. $138,000
e. None of the above.
2. Refer to the Doblin Corp question above. Double declining balance method depreciation expense for year 2 (2017) would be:
a.
$42,780
b. $96,220
c. $52,900
d. $42,320
e. None of the above
Homework Answers
1. Depreciation = (264500 - 11500) / 10 = $25,300 per year
Book value of machine on 31st Dec 2020 = 264500 - 25300 x 5 = $138,000
Option d. is correct answer.
2. Double decling depreciation rate = 10 years life = 10 x 2 = 20%
Depreciation for year 1 = 264500 x 20% = 52900
Depreciation for year 2 = (264500 - 52900) x 20% = $42,320
Option d. is correct answer.
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