Question

Cheetah Copy purchased a new copy machine. The new machine cost $114,000 including installation. The company estimates the equipment will have a residual value of $28,500. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,000 2 2,000 3 2,000 4 3,200 2. Prepare a depreciation schedule for four years using the double-declining-balance method. (Hint: The asset will be depreciated in only two years.) (Do not round your intermediate calculations.) Need help with this question, Thank You

Answer 1

• Working

A	Cost	$          114,000.00
B	Residual Value	$            28,500.00
C=A - B	Depreciable base	$            85,500.00
D	Life [in years]	4
E=C/D	Annual SLM depreciation	$            21,375.00
F=E/C	SLM Rate	25.00%
G=F x 2	DDB Rate	50.00%

• Requirement: Double Declining Method

Year	Beginning Book Value	Depreciation rate	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$           114,000.00	50.00%	$         57,000.00	$             57,000.00	$        57,000.00
2	$              57,000.00	50.00%	$         28,500.00	$             28,500.00	$        85,500.00
3	$              28,500.00		$         0.00	$             28,500.00	$        85,500.00
4	$              28,500.00		$         0.00	$             28,500.00	$        85,500.00