Pina Corporation purchased machinery on January 1, 2017, at a cost of $280,000.
ID: 2566327 • Letter: P
Question
Pina Corporation purchased machinery on January 1, 2017, at a cost of $280,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $32,000. The company is considering different depreciation methods that could be used for financial reporting purposes.
* Depreciation expense for 2020 under Double declining-balance is adjusted so that ending book value is equal to salvage value.
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line STRAIGHT-LINE DEPRECIATION Computation End of Year Years Depreciable Cost x Depreciation Rate = Annual Depreciation Expense Accumulated Depreciation 2017 2018 2019 2020 Book Value DOUBLE-DECLINING-BALANCE DEPRECIATION Computation End of Year Years 2017 2018 2019 2020 Book Value Beginning of Year × Depreciation Rate Annual Depreciation Expense Accumulated Depreciation Book Value 3,000Explanation / Answer
1) Calculation of Depreciation schedule using straight line depreciation method :
2) Calculation of Depreciation Schedule using Double declining balance method :
Year Dep.Cost($) Dep.Rate Dep.Exp($) Acc.Dep($) Book value($) 2017 248,000 25% 62,000 62,000 218,000 2018 248,000 25% 62,000 124,000 156,000 2019 248,000 25% 62,000 186,000 94,000 2020 248,000 25% 62,000 248,000 32,000(S.V) Total Dep 248,000