A storage tank acquired at the beginning of the fiscal year at a cost of 122,400

Question

A storage tank acquired at the beginning of the fiscal year at a cost of 122,400 has an estimated residual value of $7,000 and an estimated useful life of 10 years. A). determine the amount of annual depreciation by the straight line method? B). Determine the amount of depreciation for the first and second years computed by the double declining balance method. Do not round the double declining balance rate. If required, round your answer to the nearest dollar A storage tank acquired at the beginning of the fiscal year at a cost of 122,400 has an estimated residual value of $7,000 and an estimated useful life of 10 years. A). determine the amount of annual depreciation by the straight line method? B). Determine the amount of depreciation for the first and second years computed by the double declining balance method. Do not round the double declining balance rate. If required, round your answer to the nearest dollar

Explanation / Answer

a) Straight line depreciation = (122400-7000/10) = 11540 per year

b) Straight line rate = 100/10 = 10%

Double decline rate = 10*2 = 20%

First year dep = 122400*20% = 24480

Second year dep = 122400*80%*20% = 19584

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