Surplus Warehouse purchased a forklift on January 1 2016 for

Surplus Warehouse purchased a forklift on January 1, 2016, for $12,000. The forklift is expected to last for five years and have a residual value of $1,200. Surplus Warehouse uses the double-declining-balance method for depreciation.

a. Calculate the depreciation expense, accumulated depreciation, and book value for each year of the forklift’s life. Round any depreciation calculations to the nearest dollar.

Year	Annual Depreciation	Accumulated Depreciation	Book Value
2016	$	$	$
2017
2018
2019
2020

Solution

Rate of depreciation per year= 2/useful life *100 useful life (in years) 5 Rate of depreciation per year= 40% Year Gross block Net book value opening Ac Dep opening Dep expense Ac Dep closing Net book value closing a b c d e=c+d f=a-e 2016          12,000.00        12,000.00                    -       4,800.00        4,800.00     7,200.00 2017          12,000.00           7,200.00        4,800.00     2,880.00        7,680.00     4,320.00 2018          12,000.00           4,320.00        7,680.00     1,728.00        9,408.00     2,592.00 2019          12,000.00           2,592.00        9,408.00     1,036.80      10,444.80     1,555.20 2020          12,000.00           1,555.20      10,444.80        622.08      11,066.88        933.12