Computing and recording straight-line versus double-declining- balance depreciation
At the beginning of 2011, Macon Drugstore purchased a new computer system for $48,000. It is
expected to have a five-year life and a $3,000 salvage value.
Required
a. Compute the depreciation for each of the five years, assuming that the company uses
(1) Straight-line depreciation.
(2) Double-declining-balance depreciation.
b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double-declining-balance methods in a financial statements model like the following one:
c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses
(1) Straight-line depreciation.
(2) Double-declining-balance depreciation.
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