Boscan Corporation purchased machinery on January 1, 2014, at a cost of $285, 00

Question

Boscan Corporation purchased machinery on January 1, 2014, at a cost of $285, 000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $28, 600. The company is considering different depreciation methods that could be used for financial reporting purposes. Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. Depreciation expense for 2017 under Double declining-balance is adjusted so that ending book value is equal to salvage value.

Explanation / Answer

Depreciable Cost = 285000-28600 256400 Straight Line Depreciation Years Depreciation Cost Depreciation Rate = Annual Depreciation Accumulated Depreciation Book Value 2014 256400 25% 64100 64100 192300 2015 256400 25% 64100 128200 128200 2016 256400 25% 64100 192300 64100 2017 256400 25% 64100 256400 0 Double Declining Balance Depreciation Depreciation rate = 25*2 = 50% Years Depreciation Cost Depreciation Rate = Annual Depreciation Accumulated Depreciation Book Value 2014 256400 50% 128200 128200 128200 2015 128200 50% 64100 192300 64100 2016 64100 50% 32050 224350 32050 2017 32050 50% 16025 240375 16025

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