Question

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Star Company purchases a factory machine at a cost of $18,000 on January 1, 2017. Star...

Star Company purchases a factory machine at a cost of $18,000 on January 1, 2017. Star expects its useful life of 4 years.

Salvage value: 828

Double declining rate: 50%

Instructions

Prepare depreciation expense schedule by using declining-balance method.

Solutions

Expert Solution

Depreciation Schedule for Star Company using Double Declining Method:
Value              18,000
Rate 50%
Period Depreciation Remaining Value at Period End
2017                9,000                              9,000
2018                4,500                              4,500
2019                2,250                              2,250
2020                1,422 828

Working Notes:

1. Since the Salvage value is fixed, hence the last year depreciation is calculated as an DIfferential Value. 2250-828= 1422.

ekkarill92 answered 2 years ago
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