Question

A company purchased some equipment and placed it in service on 7-1-2017. Its cost was $160,000 with an estimated useful life of 10 years and a $20,000 salvage value. If the double declining balance method is used, what will be:

a. The depreciation expense for 2017 $,,,,,,,,

b. The acumulated depreciation at 12-31-18 $,,,,,,,,,,,,

c. The book value at 12-31-19 $,,,,,,,,,,,,

Answer 1

a.		$     16,000
b.		$     44,800
c.		$     92,160
Working:
Depreciation rate under straight line method					=	1/10	=	10%
Double declining rate					=	2 *10%	=	20%
In 2017 , Equipment was used for 6 months. So, depreciation for 2017 will be for 6 moths.
Double declining depreciation				=	$       1,60,000	x	20%
				=	$ 32,000
Depreciation expese for 2017				=	$ 32,000	x 6/12
				=	$ 16,000
Depreciation schedule:
Year	Beginning book Value			Depreciation expense			Accumulated depreciation			Ending Book Value
2017		$ 1,60,000		$ 16,000			$ 16,000			$ 1,44,000
2018		$ 1,44,000		$ 28,800			$ 44,800			$ 1,15,200
2019		$ 1,15,200		$ 23,040			$ 67,840			$     92,160
Only for 2017, depreciation is calculated for 6 months. After that for whole year depreciation has been calculated.
Year	Beginnig Book Value			Depreciation rate		Depreciation expense
2018		$ 1,44,000		20%		$ 28,800
2019		$ 1,15,200		20%		$ 23,040