Computing Straight-Line and Double-Declining-Balance Depreciation

Computing Straight-Line and Double-Declining-Balance DepreciationOn January 2, Haskins Company purchases a laser cutting machine for use in

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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