Koffman's Warehouse purchased a forklift on January 1, 2017, for $320,000. The forklift is expected to last for five years and have a residual value of $14,000. Koffman's uses the double-declining-balance method for depreciation.

Required:

1. Calculate the depreciation expense, accumulated depreciation, and book value for each year of the forklift's life. If necessary, round any depreciation calculations to the nearest dollar.

Year	Annual Depreciation			Accumulated Depreciation			Book Value
2017	$fill in the blank 4cab3b098fa8fd7_1			$fill in the blank 4cab3b098fa8fd7_2			$fill in the blank 4cab3b098fa8fd7_3
2018	fill in the blank 4cab3b098fa8fd7_4			fill in the blank 4cab3b098fa8fd7_5			fill in the blank 4cab3b098fa8fd7_6
2019	fill in the blank 4cab3b098fa8fd7_7			fill in the blank 4cab3b098fa8fd7_8			fill in the blank 4cab3b098fa8fd7_9
2020	fill in the blank 4cab3b098fa8fd7_10			fill in the blank 4cab3b098fa8fd7_11			fill in the blank 4cab3b098fa8fd7_12
2021	fill in the blank 4cab3b098fa8fd7_13			fill in the blank 4cab3b098fa8fd7_14			fill in the blank 4cab3b098fa8fd7_15

Feedback

The double-declining-balance (DDB) method calculates depreciation at double the straight-line rate per period on the book value, which is a declining amount. Assets cannot be depreciated below residual value. Straight-line rate (SLR) = 100%/asset useful life. Book value = asset acquisition cost (amount recorded in account) less the accumulated depreciation. Set up T account for accumulated depreciation.

2. Identify and analyze the effect of the transaction for depreciation for 2017.

Activity	OperatingInvestingFinancing
Accounts	Depreciation Expense Increase, Accumulated Depreciation IncreaseDepreciation Expense Increase, Accumulated Depreciation DecreaseDepreciation Expense Decrease, Accumulated Depreciation IncreaseDepreciation Expense Decrease, Accumulated Depreciation Decrease
Statement(s)	Balance SheetIncome StatementBalance Sheet and Income Statement

Feedback

Record depreciation expense by increasing the expense and accumulated depreciation accounts.

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Accumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseNo Entry

fill in the blank 417fe805efdafc1_2

Accumulated DepreciationCashDepreciation ExpenseNotes PayableEquipment ExpenseNo Entry

fill in the blank 417fe805efdafc1_4

fill in the blank 417fe805efdafc1_5

Accumulated DepreciationCashDepreciation ExpenseNotes PayableEquipment ExpenseNo Entry

fill in the blank 417fe805efdafc1_7

Accumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseNo Entry

fill in the blank 417fe805efdafc1_9

fill in the blank 417fe805efdafc1_10

Feedback

Incorrect

3. Refer to Exhibit 8-2.

What factors may have influenced Koffmans to use the double-declining-balance method?

Koffman's may believe that the double-declining-balance method

best matches the decline in usefulness of the assetit is the easiest to calculate

with the revenues produced by the asset. Koffmans may also choose this method because it allows

lessmore

depreciation to be taken in the early years of the asset life and thus

acceleratesdelays

taxes until the later years.