Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3 At the beginning of...

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3

At the beginning of Year 1, Copland Drugstore purchased a new computer system for 85,000. It is expected to have a five-year life and a $15,000 salvage value.

Required
a. Compute the depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation. (I had 7000 as the answer but it is incorrect)

2) Double-declining-balance depreciation. (Year 4 and 5 I have incorrect)

Double-Declining
Year 1	$34,000selected answer correct
Year 2	$20,400selected answer correct
Year 3	$12,240selected answer correct
Year 4	$7,344selected answer incorrect
Year 5	$4,406selected answer incorrect

Solutions

Expert Solution




	Computer cost	85000
	5 year life
	Salvage Value	15000

1	SLM

	Dep	=	(Cost-Salvage value)/Useful life
		=	(85000-15000)/5
		=	14000

	Therefore, per year depreciation is 14000


2	Double declining bal

	SLM perecentage	20	(85000/5)/85000*100

	Double rate	40
			Caln
	Dep Year1	34000	(85000*.4)
	Dep Year2	20400	(85000-34000)*0.4
	Dep Year3	12240	(85000-34000-20400)*0.4
	Dep Year4	3360	(85000-34000-20400-12240)*0.4 or [85000-15000-34000-20400-12240] whichever is lower
	Dep Year5	0
		70000

Please help us in giving me thumbs up. Really needed it very badly since I am need to offset some thumbs down where am at the receiving end. Please give me suggestion to improve my answer. ANd in case of doubt, I am there yo. Dont hesitate.

ekkarill92 answered 1 year ago

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