this one is giving me a little trouble thanksSolutionCost of

this one is giving me a little trouble, thanks

Solution

Cost of Machine = $85,400
Salvage Value = $7,200
Useful Life = 8 years

Straight-line Depreciation Rate = 1 / Useful Life
Straight-line Depreciation Rate = 1 / 8
Straight-line Depreciation Rate = 12.50%

Double-declining Depreciation Rate = 2 * Straight-line Depreciation Rate
Double-declining Depreciation Rate = 2 * 12.50%
Double-declining Depreciation Rate = 25.00%

2017:

Depreciation Expense = 25.00% * $85,400
Depreciation Expense = $21,350

Book Value of Machine at the end of 2017 = $85,400 - $21,350
Book Value of Machine at the end of 2017 = $64,050

2018:

Depreciation Expense = 25.00% * $64,050
Depreciation Expense = $16,013

Book Value of Machine at the end of 2018 = $64,050 - $16,013
Book Value of Machine at the end of 2018 = $48,037