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Computing Depreciation Expense Equipment costing $290,000, with an expected scrap value of $30,000 and an estimated useful life of 5 years, was purchased on January
| Computing Depreciation Expense | ||||||
| Equipment costing $290,000, with an expected scrap value of $30,000 and an estimated useful life of 5 years, was purchased on January 1, 2012. | ||||||
| Calculate the depreciation expense for years 2012 to 2016 using: (a) the straight-line method and (b) the double-declining-balance method. | ||||||
| Cost of Equipment | $ 290,000 | |||||
| Salvage Value | $ 30,000 | |||||
| 5 year depreciation schedule | ||||||
| Straight-line depreciation | Depreciation Expense | Accumulated Depreciation | Net Book Value (Cost of Asset less Accum. Dep) | |||
| 2012 | ||||||
| 2013 | ||||||
| 2014 | ||||||
| 2015 | ||||||
| 2016 | ||||||
| Double Declining depreciation [2/5 = 40%] | Depreciation Expense | Accumulated Depreciation | Net Book Value (Cost of Asset less Accum. Dep) | Hint: You do not include salvage value in your calculation | Subsequent Year Depreciation is based off of Net Book value | Do not depreciate asset below cost less salvage value |
| 2012 | ||||||
| 2013 | ||||||
| 2014 | ||||||
| 2015 | ||||||
| 2016 | ||||||
| Which method is typically preferred for: | ||||||
| (a) income tax purposes? | ||||||
| (b) financial reporting purposes? | ||||||
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