Question

Porter Inc. acquired a machine that cost $367,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $43,000 at the end of its life. Porter uses the calendar year for financial reporting. Depreciation expense for one-fourth of a year was recorded in 2019.
Required:
a. Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31, 2021, and the balance of the Accumulated Depreciation account as of December 31, 2021.
b. Using the double-declining-balance depreciation method, calculate the depreciation expense for the year ended December 31, 2021, and the net book value of the machine at that date.

Answer 1

Answer:

The answer is "148050 and 246740".

Explanation:

Please find the complete question in the attached file.

for point a:  

Cost $365000$  

Less: Salvage value $36000$  

Depreciable cost $329000$

Divide by Useful life $5$

Annual Depreciation $65800$

Depreciation expense $65800$  

Accumulated Depreciation$=(65800\times \frac{1}{4})+65800+65800= 148050$

for point b:

Double declining balance rate $=\frac{1}{5}\times 2= 40\%$

Depreciation for 2019 $=365000\times 40\%\times \frac{1}{4}=36500$

Depreciation for 2020$=(365000-36500)\times 40\%=131400$

Depreciation expense for 2021 $=(365000-36500-131400)\times 40\%= 78840$

Depreciation expense 78840  

Accumulated Depreciation $=36500+131400+78840 =246740$