Question

0n January 1, 2019, Bridge corporation acquired machinery at a cost of $1,250,000. Bridge adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning Of 2022, a decision was made to change to the straight-line method of deprea.ation for the machinery. The depreciation expense for 2022 would be

Answer 1

Answer:

$91,429

Explanation:

For computing the depreciation expense for 2022 using the straight line method first we have to determine the accumulated depreciation till 2021 using the double declining method which is shown below:

First we have to find the depreciation rate which is shown below:

= One ÷ useful life

= 1 ÷ 10

= 10%

Now the rate is double So, 20%

In year 2019, the original cost is $1,250,000, so the depreciation is $250,000 after applying the 20% depreciation rate

And, in year 2020, the ($1,250,000 - $250,000) × 20% = $200,000

And in year 2021, the ($1,250,000 - $250,000 - $200,000) × 20% = $160,000

So, the accumulated depreciation is

= $250,000 + $200,000 + $160,000

= $610,000

Now the depreciation expense for 2022 is

= ($1,250,000 - $610,000) ÷ 7 years

= $91,429