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Instructions

Equipment was acquired at the beginning of the year at a cost of $637,500. The equipment was depreciated using the double-declining balance method based on an estimated useful life of 9 years and

an estimated residual value of $43,195


a. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to

the nearest whole dollar




please help me !!!!!!!! i’ve been trying so solve it & i can’t seem to understand it.

Respuesta :

anthougo

Based on the given information, the amount of the depreciation expense for the first year is $141,667.

Data and Calculations:

Cost of Equipment = $637,500

Estimated residual value = $43,195

Depreciable amount = $594,305

Estimated useful life = 9 years

Depreciation method = double-declining-balance method

Depreciation rate = 22.2222% (100/9 x 2)

First year's depreciation = $141,667 ($637,500 x 22.2222%)

Reduced balance = $495,833 ($637,500 - $141,667)

Second year's depreciation = $110,185 ($495,833 x 22.2222%)

Thus, each year's depreciation will be computed on the reduced balance. However, the last year's depreciation will be the difference between the reduced balance and the estimated residual value.

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