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   Accelerated Depreciation

   Koffman's Warehouse purchased a forklift on January 1, 2017, for $380,000. The forklift is expected to last for five years and have a residual value of $15,000. Koffman's uses the double-declining-balance method for depreciation.

   Required:

   1. Calculate the depreciation expense, accumulated depreciation, and book value for each year of the forklift's life. If necessary, round any depreciation calculations to the nearest dollar.

   Year	Annual Depreciation			Accumulated Depreciation			Book Value
   2017	$fill in the blank f5d969fddfd6060_1			$fill in the blank f5d969fddfd6060_2			$fill in the blank f5d969fddfd6060_3
   2018	fill in the blank f5d969fddfd6060_4			fill in the blank f5d969fddfd6060_5			fill in the blank f5d969fddfd6060_6
   2019	fill in the blank f5d969fddfd6060_7			fill in the blank f5d969fddfd6060_8			fill in the blank f5d969fddfd6060_9
   2020	fill in the blank f5d969fddfd6060_10			fill in the blank f5d969fddfd6060_11			fill in the blank f5d969fddfd6060_12
   2021	fill in the blank f5d969fddfd6060_13			fill in the blank f5d969fddfd6060_14			fill in the blank f5d969fddfd6060_15

   2. Identify and analyze the effect of the transaction for depreciation for 2017.

   Activity	OperatingInvestingFinancing
   Accounts	Depreciation Expense Increase, Accumulated Depreciation IncreaseDepreciation Expense Increase, Accumulated Depreciation DecreaseDepreciation Expense Decrease, Accumulated Depreciation IncreaseDepreciation Expense Decrease, Accumulated Depreciation Decrease
   Statement(s)	Balance SheetIncome StatementBalance Sheet and Income Statement

   How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

   Balance Sheet

   Income Statement

   Stockholders'

   Net

   Assets

   =

   Liabilities

   +

   Equity

   Revenues

   Expenses

   =

   Income

   Accumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseNo Entry

   fill in the blank 39f478f98fe803d_2

   Accumulated DepreciationCashDepreciation ExpenseNotes PayableEquipment ExpenseNo Entry

   fill in the blank 39f478f98fe803d_4

   fill in the blank 39f478f98fe803d_5

   Accumulated DepreciationCashDepreciation ExpenseNotes PayableEquipment ExpenseNo Entry

   fill in the blank 39f478f98fe803d_7

   Accumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseNo Entry

   fill in the blank 39f478f98fe803d_9

   fill in the blank 39f478f98fe803d_10

   3. Refer to Exhibit 8-2.

   What factors may have influenced Koffmans to use the double-declining-balance method?

   Koffman's may believe that the double-declining-balance method

   best matches the decline in usefulness of the assetit is the easiest to calculate

   with the revenues produced by the asset. Koffmans may also choose this method because it allows

   lessmore

   depreciation to be taken in the early years of the asset life and thus

   acceleratesdelays

   taxes until the later years.

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