# Computing Straight-Line and Double-Declining-Balance Depreciation ## Computing Straight-Line and Double-Declining-Balance Depreciation

On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost \$90,000, and its estimated useful life is five years, after which the expected salvage value is \$5,000. For both parts (a) and (b) below: (1) Compute depreciation expense for each year of the machine’s five-year useful life under that depreciation method. (2) Use the financial statements effects template to show the effect of depreciation for the first year only for that method.

## (a) Straight-line

\$Answer 17000 per year

Use negative signs with answers below, when appropriate.

 Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Record first year depreciation Answer 0 Answer -17000 Answer 0 Answer 0 Answer -17000

 Income Statement Revenue – Expenses = Net Income Answer 0 Answer 17000 Answer -17000

(b) Double-declining

 Year Depreciation Expense 1 \$Answer 36000 2 \$Answer 21600 3 \$ Answer 12960 4 \$Answer 7776 5 \$Answer 6664

Use negative signs with answers below, when appropriate.

 Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Record first year depreciation Answer 0 Answer -36000 Answer 0 Answer 0 Answer -36000

 Income Statement Revenue – Expenses = Net Income Answer 0 Answer 36000 Answer -36000

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