At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $225,000. It is expected to have a five-year life and a $35,000 salvage value. Required a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (2) Double-declining-balance depreciation. p. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double- declining-balance methods in a financial statements model.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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COPELAND DRUGSTORE
Horizontal Statements Model
Balance Sheet
Income Statement
Stockholders'
Equity
Assets
Statement of
Cash Flows
Book Value
Revenue
Expenses = Net Income
Retained
+ of Computer
System
Purchase of computer system
Cash
Earnings
Straight-Line Depreciation
Double-Declining-Balance Depreciation
Transcribed Image Text:COPELAND DRUGSTORE Horizontal Statements Model Balance Sheet Income Statement Stockholders' Equity Assets Statement of Cash Flows Book Value Revenue Expenses = Net Income Retained + of Computer System Purchase of computer system Cash Earnings Straight-Line Depreciation Double-Declining-Balance Depreciation
At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $225,000. It is expected to have a five-year life
and a $35,000 salvage value.
Required
a. Compute the depreciation for each of the five years, assuming that the company uses
(1) Straight-line depreciation.
(2) Double-declining-balance depreciation.
b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double-
declining-balance methods in a financial statements model.
Transcribed Image Text:At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $225,000. It is expected to have a five-year life and a $35,000 salvage value. Required a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (2) Double-declining-balance depreciation. b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double- declining-balance methods in a financial statements model.
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