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On April 1, 2016, Cyclone’s Backhoe Co. purchases a trencher for $280,000. The m

ID: 2526461 • Letter: O

Question

On April 1, 2016, Cyclone’s Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and has a salvage value of $40,000.

Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the double-declining-balance method. (Enter all amounts positive values.) (partial year 1/12, 2/12, 3/12, or 4/12)

Depreciation for the Period End of Period Annual Period Beginning of Period Book Value Depreciation Rate Partial Year Depreciation Expense Accumulated Depreciation Book Value 2016 2017

Explanation / Answer

Depreciation for the Period    

End of Period

Annual Period         

Beginning of Period Book Value

Depreciation Rate

Partial Year

Depreciation Expense     

Accumulated Depreciation         

Book Value

2016

$2,80,000

40%

9/12

$84,000

$84,000

$1,96,000

2017

$1,96,000

40%

12/12

$78,400

$1,62,400

$1,17,600

****Depreciation Rate = 2 * 1/5 = 40%    

$84000 = $280000 x 0.40 x 9/12

$78400 = $196000 x 0.40

Depreciation for the Period    

End of Period

Annual Period         

Beginning of Period Book Value

Depreciation Rate

Partial Year

Depreciation Expense     

Accumulated Depreciation         

Book Value

2016

$2,80,000

40%

9/12

$84,000

$84,000

$1,96,000

2017

$1,96,000

40%

12/12

$78,400

$1,62,400

$1,17,600

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