Explaining double-declining depriciation method


Q1) Capital Company bought 3 machines in past year. Information regarding these items is given below:

Machine Acquired Cost Salvage Value Useful life Depreciation Method

1 Jan 1, 2006 $120,000 $20,000 5 years Straight-line
2 Jan 1, 2006 80,000 10,000 5 years Double-declining
3 Sept 1, 2006 530,000 5,000 4 years Units of production

Information: Total machine hours expected for machine 3 will be 12,000 hours. Actual machine hours used in first three years were: 200 hours in 2006, 2,250 hours in 2007, and 2,500 hours in 2008:

i) The Straight-line depriciation method.

ii) The Double-declining depriciation method.

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Accounting Basics: Explaining double-declining depriciation method
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