Question
In: Accounting
A machine that cost $96,000 on January 1, 2015 was depreciated by Ava Company using the double declining method.
A machine that cost $96,000 on January 1, 2015 was depreciated by Ava Company using the double declining method. The machine had a $8,600 residual value and a useful life of 5 Years. On January 1. 2017, the company switched to the straight line method. What is the depreciation expense for the year ended December 31, 2017 $____
Solutions
Expert Solution
| Step-1:Calculation of depreciation under double declining balance | ||||||
| Straight Line Depreciation rate | = | 1/5 | = | 20% | ||
| Double declining rate | = | 2*20% | = | 40% | ||
| Year | Beginning Book Value | Double Declining Depreciation rate | Depreciation Expense | Ending Book Value | ||
| January 1, 2015 | $ 96,000 | |||||
| January 1, 2016 | $ 96,000 | 40% | $ 38,400 | $ 57,600 | ||
| January 1, 2017 | $ 57,600 | 40% | $ 23,040 | $ 34,560 | ||
| Step-2:Calculation of depreciation under straight line for the year ended on December 31, 2017 | ||||||
| Depreciation Expense under straight Line Method | = | (Cost - Salvage Value)/Useful Life | ||||
| = | (34560-8600)/3 | |||||
| = | $ 8,653.33 | |||||
| Thus, | ||||||
| Depreciation expense for the year ended December 31, 2017 | $ 8,653.33 | |||||
ekkarill92 answered 2 years agoRelated Solutions
6 (A) A machine that cost $96,000 on January 1, 2015 was depreciated by Ava Company...
6
(A) A machine that cost $96,000 on January 1, 2015 was
depreciated by Ava Company using the double declining method. The
machine had a $8,600 residual value and a useful life of 5 Years.
On January 1. 2017, the company switched to the straight line
method.
What is the book value of the machine as of January 1,
2017?________
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