On January 1 2018, Poultry Processing Company purchased a freezer and related installation equipment for $65,400. The eq...
On January 1 2018, Poultry Processing Company purchased a freezer and related installation equipment for $65,400. The equipment had a three-year estimated life with a $4,200 salvage value. Straight-line depreciation was used. At the beginning of 2020, Poultry Processing revised the expected life of the asset to four years rather than three years. The salvage value was revised to $3200.
Required
Compute the depreciation expense for each of the four year, 2018-2021
Depreciation Expense
2018
2019
2020
2021
Homework Answers
Depreciation (2018) = (65400-4200) / 3 = $20,400
Depreciation (2019) = (65400-4200) / 3 = $20,400
Net book value at the end of 2019 = 65400 - 20400*2 = $24,600
Depreciation (2020) = (24600-3200)*1/2 = $10,700
Depreciation (2021) = (24600-3200)*1/2 = $10,700
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Jackson’s policy is to use the double-declining-balance (DDB)
method of depreciation in the early years of the equipment’s life
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