Computing Straight-Line and Double-Declining-Balance Depreciation On January 2,

Question

Computing Straight-Line and Double-Declining-Balance Depreciation
On January 2, 2016, Fischer Company purchases a machine that manufactures a part for one of its key products. The machine cost $529,200 and is estimated to have a useful life of six years, with an expected salvage value of $45,000.

Compute depreciation expense for 2016 and 2017 for the following depreciation methods.
a. Straight-line.
b. Double-declining balance.

Correct
1.00 points out of 1.00

Correct
1.00 points out of 1.00

Explanation / Answer

A) Straight line dep :

Straight line dep = Original cost-salvage value/useful life

                        = (529200-45000)/6

Straight line dep = 80700

2016 dep = 80700

2017 dep = 80700

2) Double decline dep :

straight line rate = 100/6 = 16.67%

Double decline rate = 16.67*2 = 33.33%

2016 dep = 529200*33.33%=176400

2017 dep= (529200-176400)*33.33% = 117600

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