In early January 2017, NewTech purchases computer equipment for $270,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $31,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation (Enter all amounts positive values.) Answer is complete but not entirely correct.
In early January 2017, NewTech purchases computer equipment for $270,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $31,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation (Enter all amounts positive values.) Answer is complete but not entirely correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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In early January 2017, NewTech purchases computer equipment for $270,000 to use in operating activities for the next
four years. It estimates the equipment's salvage value at $31,000.
Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.
(Enter all amounts positive values.)
Year
2017
2018
2019
2020
Total
Depreciation for the Period
Beginning-
Year Book
Value
Answer is complete but not entirely correct.
End of Period
15 270,000
135,000
67.500
Depreciation
Rate
50%
50%
50%
Annual
Depreciation
135.000
67,500
33,750
16.875
253.125
Accumulated
Depreciation
Year-End
Book Value
135,000 $
202,500
236 250
253 125
135,000
67,500
33.750
16.875
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