Question

Edgy Inc. acquired $250,000 in equipment in 2019 and wishes for you to calculate its depreciation expense journal entry at the end year for years ending 12/31/2019; 12/31/2020; and 12/31/2021.

Machine A was acquired on January 2, 2019 for $100,000. Useful life is five years.

Machine B was acquired on June 30, 2019. Useful life is four years.

What is the total depreciation expense for years 2019, 2020, and 2021 using Double Declining Balance: Sum-of-the-Digits: and Straight Line Depreciation.

Answer 1

Machine A
Straight-line rate
	Straight Line Depreciation for the Period						End of Period
Years	Depreciable Cost	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	100,000		20	%		20,000	20,000	80,000
2020	100,000		20	%		20,000	40,000	60,000
2021	100,000		20	%		20,000	60,000	40,000
Double declining balance method
	DDB Depreciation for the Period						End of Period
Years	Book value beginning of the year	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	100,000		40	%		40,000	40,000	60,000
2020	60,000		40	%		24,000	64,000	36,000
2021	36,000		40	%		14,400	78,400	21,600
Double declining balance method
	Sum-of-Years' Depreciation for the Period						End of Period
Years	Depreciable Cost	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	100,000		33.33	%		33,330	33,330	66,670
2020	100,000		26.67	%		26,670	60,000	40,000
2021	100,000		20.00	%		20,000	80,000	20,000
Machine B
Straight-line rate
	Straight Line Depreciation for the Period						End of Period
Years	Depreciable Cost	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	150,000		25	%		18,750	18,750	131,250
2020	150,000		25	%		37,500	56,250	93,750
2021	150,000		25	%		37,500	93,750	56,250
Double declining balance method
	DDB Depreciation for the Period						End of Period
Years	Book value beginning of the year	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	150,000		25	%		37,500	37,500	112,500
2020	112,500		50	%		56,250	93,750	56,250
2021	56,250		50	%		28,125	121,875	28,125
Double declining balance method
	Sum-of-Years' Depreciation for the Period						End of Period
Years	Depreciable Cost	x	Depreciable Rate		=	Annual Depreciation Expense	Accumulated Depreciation	Book Value
2019	150,000		20.00	%		30,000	30,000	120,000
2020	150,000		35.00	%		52,500	82,500	67,500
2021	150,000		25.00	%		37,500	120,000	30,000