Calculate and determine depreciation using the declining balance method Assume G
ID: 2449450 • Letter: C
Question
Calculate and determine depreciation using the declining balance method Assume Galaxy Sun Industries purchased a machine for $125,000 on January 1, 2014 which is expected to have a useful life of four years. At the end of its useful life, the salvage value of the machine is estimated to be $7,000. Galaxy Sun Industries's fiscal year ends each December 31. The company has elected to depreciate the machine using the declining balance method at two times the straight-line rate. Using the data above, calculate the depreciation rate for the machine:Explanation / Answer
Declining method of depreciation:
Particulars
Amount
Cost of machine
125,000
Less:
Salvage value
7,000
Useful life in years
4
Depreciation
29,500
Rate of depreciation
23.6
Thus, the declining rate of depreciation is 23.6*2 = 47.2%
Year
Beginning value
Depreciation expense
Accumulated deprecation
Book value
2014
125,000
59,000
59,000
66,000
2015
66,000
31,152
90,152
34,848
2016
34,848
16,448
106,600
18,400
2016
18,400
8,685
115,285
9,715
2017
9,715
4,585
119,870
5,130
Particulars
Amount
Cost of machine
125,000
Less:
Salvage value
7,000
Useful life in years
4
Depreciation
29,500
Rate of depreciation
23.6
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