Koffman's Warehouse purchased a forklift on January 1, 2017, for $6,000. The forklift is expected to last for five years and have a residual value of $600. 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 ea4059023fedfdb_1 $fill in the blank ea4059023fedfdb_2 $fill in the blank ea4059023fedfdb_3 2018 fill in the blank ea4059023fedfdb_4 fill in the blank ea4059023fedfdb_5 fill in the blank ea4059023fedfdb_6 2019 fill in the blank ea4059023fedfdb_7 fill in the blank ea4059023fedfdb_8 fill in the blank ea4059023fedfdb_9 2020 fill in the blank ea4059023fedfdb_10 fill in the blank ea4059023fedfdb_11 fill in the blank ea4059023fedfdb_12 2021 fill in the blank ea4059023fedfdb_13 fill in the blank ea4059023fedfdb_14 fill in the blank ea4059023fedfdb_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 Operating Accounts Depreciation Expense Increase, Accumulated Depreciation Increase Statement(s) Balance 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 Depreciation fill in the blank 49034807607ffd4_2 No Entry fill in the blank 49034807607ffd4_4 fill in the blank 49034807607ffd4_5 No Entry fill in the blank 49034807607ffd4_7 Depreciation Expense fill in the blank 49034807607ffd4_9 fill in the blank 49034807607ffd4_10 Feedback Partially correct 3. Refer to Exhibit 8-2. What factors may have influenced Koffman’s 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 asset with the revenues produced by the asset. Koffman’s may also choose this method because it allows more depreciation to be taken in the early years of the asset life and thus delays taxes until the later years. Feedback Consider the benefits of the DDB method. Consider how revenues are matched with the decline in usefulness of the asset. Consider the tax effects.

Koffman's Warehouse purchased a forklift on January 1, 2017, for $6,000. The forklift is expected to last for five years and have a residual value of $600. 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 ea4059023fedfdb_1 $fill in the blank ea4059023fedfdb_2 $fill in the blank ea4059023fedfdb_3 2018 fill in the blank ea4059023fedfdb_4 fill in the blank ea4059023fedfdb_5 fill in the blank ea4059023fedfdb_6 2019 fill in the blank ea4059023fedfdb_7 fill in the blank ea4059023fedfdb_8 fill in the blank ea4059023fedfdb_9 2020 fill in the blank ea4059023fedfdb_10 fill in the blank ea4059023fedfdb_11 fill in the blank ea4059023fedfdb_12 2021 fill in the blank ea4059023fedfdb_13 fill in the blank ea4059023fedfdb_14 fill in the blank ea4059023fedfdb_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 Operating Accounts Depreciation Expense Increase, Accumulated Depreciation Increase Statement(s) Balance 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 Depreciation fill in the blank 49034807607ffd4_2 No Entry fill in the blank 49034807607ffd4_4 fill in the blank 49034807607ffd4_5 No Entry fill in the blank 49034807607ffd4_7 Depreciation Expense fill in the blank 49034807607ffd4_9 fill in the blank 49034807607ffd4_10 Feedback Partially correct 3. Refer to Exhibit 8-2. What factors may have influenced Koffman’s 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 asset with the revenues produced by the asset. Koffman’s may also choose this method because it allows more depreciation to be taken in the early years of the asset life and thus delays taxes until the later years. Feedback Consider the benefits of the DDB method. Consider how revenues are matched with the decline in usefulness of the asset. Consider the tax effects.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 ea4059023fedfdb_1			$fill in the blank ea4059023fedfdb_2	$fill in the blank ea4059023fedfdb_3
2018	fill in the blank ea4059023fedfdb_4			fill in the blank ea4059023fedfdb_5	fill in the blank ea4059023fedfdb_6
2019	fill in the blank ea4059023fedfdb_7			fill in the blank ea4059023fedfdb_8	fill in the blank ea4059023fedfdb_9
2020	fill in the blank ea4059023fedfdb_10			fill in the blank ea4059023fedfdb_11	fill in the blank ea4059023fedfdb_12
2021	fill in the blank ea4059023fedfdb_13			fill in the blank ea4059023fedfdb_14	fill in the blank ea4059023fedfdb_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	Operating
Accounts	Depreciation Expense Increase, Accumulated Depreciation Increase
Statement(s)	Balance 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 Depreciation

fill in the blank 49034807607ffd4_2

No Entry

fill in the blank 49034807607ffd4_4

fill in the blank 49034807607ffd4_5

No Entry

fill in the blank 49034807607ffd4_7

Depreciation Expense

fill in the blank 49034807607ffd4_9

fill in the blank 49034807607ffd4_10

Feedback

Partially correct

3. Refer to Exhibit 8-2.

What factors may have influenced Koffman’s 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 asset with the revenues produced by the asset. Koffman’s may also choose this method because it allows more depreciation to be taken in the early years of the asset life and thus delays taxes until the later years.

Feedback

Consider the benefits of the DDB method. Consider how revenues are matched with the decline in usefulness of the asset. Consider the tax effects.

Feedback

Partially correct

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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