Question

Windsor Company purchases equipment on January 1, Year 1, at a cost of $516,000. The asset is expected to have a service life of 12 years and a salvage value of $46,440.

Calculate depreciation for years 1, 2 and 3 using the double-declining-balance method.

Answer 1

Calculate depreciation for years 1, 2 and 3 using the double-declining-balance method. |Depreciation for Year 1 $86,017 Depreciation for Year 2 $71,678 Depreciation for Year 3 $59,729 Double-declining depreciation rate - Double-declining depreciation rate = Double-declini ciation rate = Explanation: 2 x Straight-line depreciation percent |(1/12 years) x 2 16.67% Year Book Value Computation End of Year Book Value * Double Declining = Annual Depreciation Accumulated Beginning of Year rate Expense Depreciation $516,000 16.67% $86,017 $86,017 429,983 16.67% 71,678 157,695 358,305 16.67% 59,729 217,425 WN - $429,983 358,305 298,575