Answer:
Instructions are listed below.
Explanation:
Giving the following information:
A Kubota tractor acquired on January 8 for $324,000 has an estimated useful life of ten years. Assuming that it will have no residual value.
A) Straight-line method:
Depreciation= 324,000/10= 32,400
First year= 32,400
Second year= 32,400
B) Double declining balance:
Depreciation rate= 0.10
Year 1= 324,000*0.10*2= 64,800
Year 2= (324,000 - 64,800)*0.20= 51,840
Answer:
a. Each of the first 2 year will record depreciation expense of 32,400 per year.
b.
Depreciation in Year 1 = 0.2 x 324,000 = 64,800.
Depreciation in Year 2 = 0.2 x (324,000 - 64,800) = 51,840.
Explanation:
a. In straight-line depreciation method, depreciation expense is calculated as below:
Depreciation expense = (Origin cost - Residual value)/Estimated useful life
= (324,000 - 0)/10 = 32,400.
So, each of the first 2 year will record depreciation expense of 32,400 per year.
b. In double-declining depreciation method, depreciation expense is calculated as below:
Straight line method depreciation rate = 1/10 = 0.1 => Double declining rate is 0.1 x 2 = 0.2
Depreciation in Year 1 = 0.2 x 324,000 = 64,800.
Depreciation in Year 2 = 0.2 x (324,000 - 64,800) = 51,840.
