Question

Accelerated Depreciation

Koffman's Warehouse purchased a forklift on January 1, 2017, for $180,000. The forklift is expected to last for five years and have a residual value of $11,000. Koffman's uses the double-declining-balance method for depreciation.

Required:

1. Calculate the depreciation expense, accumulated depreciation, and book value for each year of the forklift's life. If necessary, round any depreciation calculations to the nearest dollar.

Year	Annual Depreciation			Accumulated Depreciation			Book Value
2017	$			$			$
2018
2019
2020
2021

2. Identify and analyze the effect of the transaction for depreciation for 2017.

Activity	Operating
Accounts	Depreciation Expense Increase, Accumulated Depreciation Increase
Statement(s)	Balance Sheet and Income Statement

Feedback

Record depreciation expense by increasing the expense and accumulated depreciation accounts.

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

–

Expenses

=

Income

Accumulated Depreciation

Equipment Expense

Feedback

Answer 1

Double-Declining-Balance Depreciation Schedule
		Depreciation for the Year
	Asset	Book		DDB		Depreciation	Accumulated	Book
Year	Cost	Value		Rate		Expense	Depreciation	Value
2017	$180,000	180,000		40%		72,000	72,000	$108,000
2018		$108,000	x	40%	=	$43,200	$115,200	$64,800
2019		$64,800	x	40%	=	$25,920	$141,120	$38,880
2020		$38,880	x	40%	=	$15,552	$156,672	$23,328
2021 (46656-11,000)		$23,328	x		=	$12,328	$169,000	$11,000
DDB Rate= 1/ Estimated Life X 2= 1/5X2= 40%
Thirs year depreciation= 10500-6000=$4500

Part-2

Activity: Operating

Account Involved: Accumulated Depreciation and Depreciation Expense

Balance sheet Analysis: Accumulated Depreciation decreased asset by 72,000 and Depreciation Expense will decrease the stockholder Equity by $72,000

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

–

Expenses

=

Income

Accumulated Depreciation

-72,000

Equipment Expense

-72000

72,000

-72000

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