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
|
|||