Following the depreciation example on page 7-6 of the VLN, determine 150% declining balance year 2 depreciation expense?____________

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Following the depreciation example on page 7-6 of the VLN, determine 150% declining balance year 2 depreciation expense?____________
Alternative Depreciation Methods
Straight-line (SL)
Depreciation expense = Cost – Residual value
Life in years
Declining-balance (DB) or Accelerated method. (200%
maximum Declining rate, if the declining rate is 200% it is
called Double Declining Balance)
DB Depreciation Rate = Declining rate
Life in years
Depreciation expense = DB Depreciation Rate x Beginning
of the year Book Value
Depreciation expense
Accumulated depreciation)
DB Depreciation Rate x (Cost -
Activity-Based (Units of Production)
Cost - Residual value
Life in units
Depreciation rate per unit =
production
Depreciation expense = Depreciation rate per unit x Units
of production for the year
Practice
A new stamping machine was purchased at a cost of $125,000.
The estimated residual value is $20,000, and the estimated
useful life is 3 years. The estimated productive life of the
machine is 150,000 units.
Determine the following for Straight line Depreciation
Cost
RV
Depreciable cost
Life
Year 1
Depreciation expense
Accumulated depreciation
Book value
Year 2
Depreciation expense
Accumulated depreciation
Book value
Year 3
Depreciation expense
Accumulated depreciation
Book value
Transcribed Image Text:Alternative Depreciation Methods Straight-line (SL) Depreciation expense = Cost – Residual value Life in years Declining-balance (DB) or Accelerated method. (200% maximum Declining rate, if the declining rate is 200% it is called Double Declining Balance) DB Depreciation Rate = Declining rate Life in years Depreciation expense = DB Depreciation Rate x Beginning of the year Book Value Depreciation expense Accumulated depreciation) DB Depreciation Rate x (Cost - Activity-Based (Units of Production) Cost - Residual value Life in units Depreciation rate per unit = production Depreciation expense = Depreciation rate per unit x Units of production for the year Practice A new stamping machine was purchased at a cost of $125,000. The estimated residual value is $20,000, and the estimated useful life is 3 years. The estimated productive life of the machine is 150,000 units. Determine the following for Straight line Depreciation Cost RV Depreciable cost Life Year 1 Depreciation expense Accumulated depreciation Book value Year 2 Depreciation expense Accumulated depreciation Book value Year 3 Depreciation expense Accumulated depreciation Book value
Determine the following table for 150% Declining Balance
Depreciation
Cost
RV
Depreciable cost
Life
Year 1
Depreciation expense
Accumulated depreciation
Book value
Year 2
Depreciation expense
Accumulated depreciation
Book value
Year 3
Depreciation expense
Accumulated depreciation
Book value
Determine the following for Activity-Based (Units of
Production) Depreciation
Cost
RV
Depreciable cost
Life
Year Units made
52,000 units
50,000 units
48,000 units
Year 1
Depreciation expense
Accumulated depreciation
Book value
Year 2
Depreciation expense
Accumulated depreciation
Book value
Year 3
Depreciation expense
Accumulated depreciation
Book value
Transcribed Image Text:Determine the following table for 150% Declining Balance Depreciation Cost RV Depreciable cost Life Year 1 Depreciation expense Accumulated depreciation Book value Year 2 Depreciation expense Accumulated depreciation Book value Year 3 Depreciation expense Accumulated depreciation Book value Determine the following for Activity-Based (Units of Production) Depreciation Cost RV Depreciable cost Life Year Units made 52,000 units 50,000 units 48,000 units Year 1 Depreciation expense Accumulated depreciation Book value Year 2 Depreciation expense Accumulated depreciation Book value Year 3 Depreciation expense Accumulated depreciation Book value
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