Question

In: Accounting

Bolton, Inc. purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have...

Bolton, Inc. purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $7,800.

Using the double-declining balance method, depreciation for 2019 would be:

Solutions

Expert Solution

  • All working forms part of the answer
  • Workings

A

Cost

$            87,000.00

B

Residual Value

$              7,800.00

C=A - B

Depreciable base

$            79,200.00

D

Life [in years]

5

E=C/D

Annual SLM depreciation

$            15,840.00

F=E/C

SLM Rate

20.00%

G=F x 2

DDB Rate

40.00%

Year

Beginning Book Value

Depreciation rate

Depreciation expense

Ending Book Value

2018

$              87,000.00

40.00%

$         34,800.00

$             52,200.00

2019

$              52,200.00

40.00%

$         20,880.00 [ANSWER]

$             31,320.00

  • Answer: Depreciation for 2019 = $ 20,880 [Double Declining Balance Method]

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