Question

In: Accounting

Real Estate Office ​ A real estate office using the double-declining-balance method of depreciation purchased office...

Real Estate Office

A real estate office using the double-declining-balance method of depreciation purchased office furniture costing $9,000 and put it in use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600.

Refer to the Real Estate Office scenario. Compute the depreciation expense for April 1 through December 31 of the first tax year and all 12 months of the second and third years.

Solutions

Expert Solution

SOLUTION :
CALCULATION OF THE DEPRECIATION AS PER DOUBLE DECLINE METHOD FOR MACHINE C
Rate of Depreciation =
Rate of Depreciation = (1 / 10 Years ) 0.10 or 10.00%
(Depreication / Purchase price )
Double decline deprection rate = 10% * 2 = 20.0%
Rate of depreciation for first year = 20% X 9 Month / 12 month= 15.0%
Years Book Value / Beginning value Derecaition Rate Depreciation expenses Closing Value
Year 1 - April to Dec $                        9,000 15% $                1,350 $                         7,650
Year 2 $                        7,650 20% $                1,530 $                         6,120
Year 3 $                        6,120 20% $                1,224 $                         4,896
Answer =
Depeciaiton Expenses
Year 1 - April to Dec $                        1,350
Year 2 $                        1,530
Year 3 $                        1,224

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