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    One-Half of Its First Year of Life.) : Asset's Life Using

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    Freedom Co. purchased a machine for $132,000 on July 2, 2019 that has a 5 year estimated life and salvage value of $18,000. To calculate depreciation expense for 2019 and accumulated depreciation and net book value as of December 31, 2020 using straight-line and double declining balance depreciation. Straight-line results in 2019 expense of $11,400 and double declining balance results in 2019 expense of $26,400. As of December 31, 2020 accumulated depreciation is $34,200 with a net book value of $97,800 under straight-line and accumulated depreciation is $68,640 with a net book value of $63,360 under double

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    One-Half of Its First Year of Life.) : Asset's Life Using

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    C
    129 views6 pages
    Freedom Co. purchased a machine for $132,000 on July 2, 2019 that has a 5 year estimated life and salvage value of $18,000. To calculate depreciation expense for 2019 and accumulated depreciation and net book value as of December 31, 2020 using straight-line and double declining balance depreciation. Straight-line results in 2019 expense of $11,400 and double declining balance results in 2019 expense of $26,400. As of December 31, 2020 accumulated depreciation is $34,200 with a net book value of $97,800 under straight-line and accumulated depreciation is $68,640 with a net book value of $63,360 under double

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    Freedom Co. purchased a machine for $132,000 on July 2, 2019 that has a 5 year estimated life and salvage value of $18,000. To calculate depreciation expense for 2019 and accumulated depreciation and net book value as of December 31, 2020 using straight-line and double declining balance depreciation. Straight-line results in 2019 expense of $11,400 and double declining balance results in 2019 expense of $26,400. As of December 31, 2020 accumulated depreciation is $34,200 with a net book value of $97,800 under straight-line and accumulated depreciation is $68,640 with a net book value of $63,360 under double

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    129 views6 pages

    One-Half of Its First Year of Life.) : Asset's Life Using

    Uploaded by

    C
    Freedom Co. purchased a machine for $132,000 on July 2, 2019 that has a 5 year estimated life and salvage value of $18,000. To calculate depreciation expense for 2019 and accumulated depreciation and net book value as of December 31, 2020 using straight-line and double declining balance depreciation. Straight-line results in 2019 expense of $11,400 and double declining balance results in 2019 expense of $26,400. As of December 31, 2020 accumulated depreciation is $34,200 with a net book value of $97,800 under straight-line and accumulated depreciation is $68,640 with a net book value of $63,360 under double

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    Depreciation calculation methods—partial year  Freedom Co.

    purchased a new machine on July 2, 2019, at a total installed cost of $132,


    years and an estimated salvage value of $18,000.

    Required:

    a. Calculate the depreciation expense for each year of the asset’s life using:

    1. Straight-line depreciation.

    2. Double-declining-balance depreciation.

    b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2019, under each me
    one-half of its first year of life.)

    c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2020, under each method.

    Estimated Useful Life


    Cost of Machine
    Estimated Salvage Life
    Amount to be Depreciated

    A. Calculate the depreciation expense for each year of the asset’s life using:

    1) Straight-line Depreciation:

    Annual Depreciation Expense =

    Year Depeciation Expense


    July to Dec 2019 $11,400.00
    Jan to Dec 2020 $22,800.00
    Jan to Dec 2021 $22,800.00
    Jan to Dec 2022 $22,800.00
    Jan to Dec 2023 $22,800.00
    Jan to June 2024 $11,400.00

    2) Double Declining Balance Depreciation:

    Straight-Line Rate=
    Double Declining Rate=
    Salvage Value=

    Net Book Value at the Beginning of Year


    Year at Beginning of Year
    July to Dec 2019 $132,000.00
    Jan to Dec 2020 $105,600.00
    Jan to Dec 2021 $63,360.00
    Jan to Dec 2022 $38,016.00
    Jan to Dec 2023 $22,809.60
    Jan to June 2024 $18,000.00

    B. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2019, under
    Straight Line: Year
    July to Dec 2019

    Double Declining:

    Year
    July to Dec 2019

    C. Calculate the accumulated depreciation and net book value of the machine at December 31, 2020, under each method.

    Straight Line: Year


    July to Dec 2019
    Jan to Dec 2020

    Double Declining:

    Year
    July to Dec 2019
    Jan to Dec 2020
    chine on July 2, 2019, at a total installed cost of $132,000. The machine has an estimated life of five

    cal year ended December 31, 2019, under each method? (Note: The machine will have been used for

    ecember 31, 2020, under each method.

    5 years
    $132,000.00
    $18,000.00
    $114,000.00

    $22,800.00 per year

    Accumulated Depreciation
    $11,400.00
    $34,200.00
    $57,000.00
    $79,800.00
    $102,600.00
    $114,000.00

    20%
    40%
    $ 18,000.00

    Depreciation Rate Depreciation Expense


    40% $26,400.00
    40% $42,240.00
    40% $25,344.00
    40% $15,206.40
    40% $4,809.60
    0% $0.00

    o. for its fiscal year ended December 31, 2019, under each method? (Note: The machine will have been used for one-half of its first year of life.)
    Depeciation Expense Accumulated Depreciation
    $11,400.00 $11,400.00

    Net Book Value at the Beginning of Year


    at Beginning of Year Depreciation Rate Depreciation Expense
    $132,000.00 40% $26,400.00

    machine at December 31, 2020, under each method.

    Depeciation Expense Accumulated Depreciation


    $11,400.00 $11,400.00
    $22,800.00 $34,200.00

    Net Book Value at the Beginning of Year


    at Beginning of Year Depreciation Rate Depreciation Expense
    $132,000.00 40% $26,400.00
    $105,600.00 40% $42,240.00
    (At End of Year)

    Accumulated Depreciation Net Book Value


    $26,400.00 $105,600.00
    $68,640.00 $63,360.00
    $93,984.00 $38,016.00
    $109,190.40 $22,809.60
    $114,000.00 $18,000.00
    $114,000.00 $18,000.00

    its first year of life.)


    (At End of Year)

    Depreciation Expense Accumulated Depreciation Net Book Value


    $26,400.00 $26,400.00 $105,600.00

    Net Book Value


    $120,600.00
    $97,800.00

    (At End of Year)

    Depreciation Expense Accumulated Depreciation Net Book Value


    $26,400.00 $26,400.00 $105,600.00
    $42,240.00 $68,640.00 $63,360.00

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