E9-20 (similar to Question Hap * Granny\'s Fred Cicken bought eq?prert on Januar
ID: 2558791 • Letter: E
Question
E9-20 (similar to Question Hap * Granny's Fred Cicken bought eq?prert on January 2, 2018, for S36,000. The equernent was expeded to remain in service for four years and to operate for 10,000 hon Atthe "d of to equpmern useAd M·Grannys eslinales uat sresidual wie wil be $6,000, The equipment operated for 1,00 hors tefist year, 3,000 houns the seoand year, 4,000 hours the ed year, and 2,000 hours the fourth year Read the requirements 9,000 12,000 12-31-2019 12-31-2020 2-31-2021 24,000 2,000 2,000 30,000 Prepare a depreciation schedule using the double-deciningbaiance (bbe) mehod.(Enter a lor any iems with a zero value) Depreciation for the Year Depreciation AccumulatedBook Expense Depreciation Value 1.22018% 30,000 2-31-2018 12-31-2019 $ 36,000 36,000x 2-31-2021 Choose trom any list or eter any number in the input Sields and then click Check Answer Clear A MacBook Air 858 3 5 a WEExplanation / Answer
DDB Depreciation (Double Declining Balance)
It is a method of depreciation used by the companies when they want to quickly depreciate an asset.
The asset will depreciate much faster under this method than straight-line because we double the percentage that would be depreciated each year under straight-line.
Salvage value is not subtracted from Cost of Asset when depreciation is calculated by using this method.
The formula for double declining balance is:
Annual depreciation = Book Value * 100% / life * 2
Calculate the percentage that should be used first.
Percentage = 100% / Useful Life x 2 = 100% / 4 Years x 2 = 50%
Once the percentage is calculated, it is the same for the rest of the asset’s life.
Year
DDB Depreciation for the period
End of Period
Asset Cost
Beginning of period book value
Depreciation Rate
Depreciation Expenses
Accumulated Depreciation
Book Value
1/2/2018
$36,000
36,000
12/31/2018
36,000
50.00%
18,000
18,000
18,000
12/31/2019
18,000
50.00%
9,000
27,000
9,000
12/31/2020
9,000
50.00%
33.33%
7,575
3,000
30,000
6,000
12/31/2021
50.00%
0
30,000
6,000
Note --- The annual depreciation for Year ending 12/31/2020 is more than the amount of remaining depreciation we are allowed to take on the asset. Therefore, we cannot take the full amount of depreciation calculated. Instead, we are limited to $3000 in Year ending 12/31/2020.
Year
DDB Depreciation for the period
End of Period
Asset Cost
Beginning of period book value
Depreciation Rate
Depreciation Expenses
Accumulated Depreciation
Book Value
1/2/2018
$36,000
36,000
12/31/2018
36,000
50.00%
18,000
18,000
18,000
12/31/2019
18,000
50.00%
9,000
27,000
9,000
12/31/2020
9,000
50.00%
33.33%
7,575
3,000
30,000
6,000
12/31/2021
50.00%
0
30,000
6,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.