Question
Conok Company has a fiscal year ending on Dec 31 each year. The company purchased (on April 1, 2015) equipment with a total cost of
Conok Company has a fiscal year ending on Dec 31 each year. The company purchased (on April 1, 2015) equipment with a total cost of $500,000, estimated useful life of 10 years, and estimated salvage value of $70,000. On Jan 1, 2017, the company automated the equipment at a cost of $200,000 to facilitate 24 hours operations. This doubled production of the asset but the useful life was decreased by 4 years. Prepare a depreciation table (like the one shown below) to calculate the depreciation expense and the accumulated depreciation each year using the double declining balance method.
Year | Beginning Net Book Value | DEPRECIATION RATE (%) | DEPRECIATION EXPENSE | ACCUMULATED DEPRECIATION | ENDING NET BOOK VALUE |
2015 | $500,000 | 20% | $100,000 | $75,000 | $425,000 |
2016 | $425,000 | 20% | 85000 | $540,000 | |
2017 | $540,000 | 47.06% | $254,118 | $414,118 | $285,882 |
2018 | $285,882 | 47.06% | $134,533 | $548,651 | $151,349 |
2019 | $151,349 | 47.06% | $71,223 | $619,874 | $80,126 |
2020 | $80,126 | 47.06% | $37,706 | $657,580 | $42,420 |
2021 | $42,420 | 11.76% | $4,991 | $662,571 | $37,429 |
I'm not sure how to calculate the salvage value into my table.
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