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Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $49,000....

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Question

Accounting

Freedom Co. purchaseda new machine on July 2, 2016, at a total installed cost of$49,000. The machine has an estimated life of five years and anestimated salvage value of $6,700.

Required:

a-1.Calculate the depreciation expense for each year of the asset'slife using Straight-line depreciation.

YearDepreciation Expense
1$8,460
2$8,460
3$8,460
4$8,460
5$8,460

a-2.Calculate the depreciation expense for each year of the asset'slife using Double-declining-balance depreciation.

YearDepreciation Expense
1$19,600
2$11,760
3$7,056
4$3,884
5$0

b.How much depreciation expense should be recorded by Freedom Co. forits fiscal year ended December 31, 2016, under each method?(Note: The machine will have been used for one-half of itsfirst year of life.)

Depreciation Expense
Straight?line$4,230
Double-declining balance$9,800

c.Calculate the accumulated depreciation and net book value of themachine at December 31, 2017, under each method.

CostAccumulated DepreciationNet BookValue
Straight?line$49,000$0$0
Double-declining?balance49,00000

Answer & Explanation Solved by verified expert
3.6 Ratings (309 Votes)
A1 depreciation under straight line method That is cost salvage valueno of years That is 4900067005 8460 per year B depreciation under double declining method Double declining rate is 8460423002    See Answer
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