Question

ments Kenneth's Lumber Mill sold two pleces of equipment in 2022. The following information pertains to the two pieces of equipment: Purchase Date Useful Life Sales Price Machine Cost Salvage Depreciation Value Method Date Sold $9,600 Straight-line 7/1/22 $8,000 Double-declining-balance 12/31/22 $32,000 #1 $137,600 7/1/18 5 yrs $59,200 #2 $152,000 1/1/21 5 yrs (a) Compute the depreciation on each piece of equipment to the date of disposal. Machine 1 Annual Depreciation Accumulated Depreciation Year $ 2018 5 2019 2020 2021

Answer 1

Machine#1 :-

Year	Annual Depreciation	Accumulated Depreciation
2018	$                          12,800	$                                       12,800
2019	$                          25,600	$                                       38,400
2020	$                          25,600	$                                       64,000
2021	$                          25,600	$                                       89,600
2022	$                          12,800	$                                    102,400

Depreciation under Straight line = (Cost - Salvage)/Life

= ($137600 - $9600)/5 years = $25600

Depreciation for 2018 & 2022 = $25600 * 6/12 = $12800

Machine#2 :-

Year	Annual Depreciation	Accumulated Depreciation
2021	$                          60,800	$                                       60,800
2022	$                          36,480	$                                       97,280

Depreciation rate under Double declining balance = (1/Life) * 2 * 100

= (1/5 years) * 2 * 100 = 40%

Depreciation = Book value * DDB rate

2021 = $152000 * 40% = $60800

2022 = ($152000 - $60800) * 40% = $36480