A company\'s property records revealed the following information about its plant

Question

A company's property records revealed the following information about its plant assets:

Machine No.

Cost

Salvage Value

Purchase Date

Depreciation Method and Estimate Life

1

$42,000

$3,000

10/1/08

Straight-line (3 years)

2

86,000

8,600

7/1/08

Double-declining-balance (5 years)

Calculate the depreciation expense for each machine for the year ended December 31, 2010 and for the year ended December 31, 2009.
Machine 1:
2009 _______________________
2010 _______________________


Machine 2:
2009 _______________________
2010 _______________________

Machine No.

Cost

Salvage Value

Purchase Date

Depreciation Method and Estimate Life

1

$42,000

$3,000

10/1/08

Straight-line (3 years)

2

86,000

8,600

7/1/08

Double-declining-balance (5 years)

Explanation / Answer

Straight Line Method:- Calculation of Depreciation expense.

Machine 1.

Year 2009 = 42000 - 3000 / 3 = $ 13000

Year 2010 = 42000 - 3000 / 3 = $ 13000

Machine 2.

Year 2009 = 86000 - 8600 / 5 = $ 15480

Year 2010 = 86000 - 8600 / 5 = $ 15480

Double Declining Depreciation method:- Calculation of Depreciation expense.

Machine 1.

Year 2009 = 13000 * 2 = $ 26000

Year 2010 = 13000 * 2 = $ 26000

Machine 2.

Year 2009 = 15480 * 2 = $ 30960

Year 2010 = 15480 * 2 = $ 30960

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