Eckman Company purchased equipment for $80,000 on January 1, 2011, and will use the double-declining-balance method of depreciat
1 answer:
Answer:
Depreciation Expense = $11,520
Explanation:
given data
equipment = $80,000
salvage value = $4,000
Life = 5 years
to find out
The amount of depreciation expense recognized
solution
we get first Straight line Depreciation Rate that is
Straight line Depreciation Rate = ....................1
Straight line Depreciation Rate =
Straight line Depreciation Rate = 20%
and
Double declining Depreciation Rate will be
Double declining Depreciation Rate = 2 × Straight line Depreciation Rate .....................2
Double declining Depreciation Rate = 2 × 20% = 40%
and
Depreciation Expense during 2011 = equipment × Double declining Depreciation Rate ...................3
Depreciation Expense during 2011 = $80,000 × 40% = $32000
and Book Value at 31st December 2011
Book Value = equipment - Depreciation Expense ...................4
Book Value = $80,000 - $32,000
Book Value = $48,000
as that Depreciation Expense during 2012 will be
Depreciation Expense = Book Value × Double declining Depreciation Rate .....................5
Depreciation Expense = $48,000 × 40%
Depreciation Expense = $19,200
and Book Value at 31st December 2012
Book Value = Book Value 2011 - Depreciation Expense ................6
Book Value = $48,000 - $19,200
Book Value= $28,800
and Depreciation Expense during 2013 will be
Depreciation Expense = Book Value × Double declining Depreciation Rate ................7
Depreciation Expense = $28,800 × 40%
Depreciation Expense = $11,520
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