Question
In: Accounting
Prepare a depreciation schedule to be used for tax purposes for a $60,000 dump truck using...
Prepare a depreciation schedule to be used for tax purposes for a $60,000 dump truck using the 200% declining-balance method and the mid-year convention.
Solutions
Expert Solution
Under double declining method of depreciation,Depreciation would be 200% of that of Straight line method of depreciation.As per IRS useful life for the vehicles (DumpTruck) woulfd be 5 years.Hence straightline depreciation would be 60000/5 i.e. 12000.Therefore Depreciation under 200%Double declining method would be:
Year Depreciation
1 2(12000)=24000
2 24000
3 12000
In mid year conventon method it would be treated like as if asset was purchased in the middle of the year and only half depreciation would be expensed in the year one.This applies to all forms of depreciation including double declining method and straight line method.Under this method the deprection should be as follows(using Staright line mehod)
Year Depreciation
1 12000/2=6000
2 12000
3 12000
4 12000
5 12000
6 6000
Using Double declining method for Mid convention
Year Depreciation
1 24000/2 =12000
2 24000
3 12000+12000=24000
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Depreciation and Depletion
Schedule
Delivery Truck
Inputs:
Original cost
$
68,000
Salvage value
$
4,400
Depreciable cost
$
63,600
Estimated useful life
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Depreciation rate
50%
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Last year fraction
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End of Year
Book Value
Annual
at Beginning
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Depreciation
Accumulated
Book
Year
of Year
Rate
Expense
Depreciation
Value
2017
2018
2019
2020
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