| =$142000 or (Cost - Residual Value) *Rate of Depreciation whewre rate of depreciation = 1/ Useful life =1/5=20% Therefore annual depreciation = ($800000- $90000)*20% = $142000 Table as per Straight line method(A) | Year | Depreciation expense | Accumulated depreciation,End of year | Book Value End of year | | 1 | $142,000 | $142000 | $800000- $142000= | $658,000 | | 2 | $142,000 | $284000 | $658000-$142000= | $516,000 | | 3 | $142,000 | $426000 | $516000-$142000= | $374,000 | | 4 | $142,000 | $568000 | $374000-$142000= | $232,000 | | 5 | $142,000 | $710000 | $232000-$142000= | $90,000 | Table as per Double Declining Balance Method(B) | Year | Book Value Beginning of of year | Depreciation expense | Accumulated depreciation,End of year | Book Value End of year | | | | | | | 2*SL Rate*Bookvalue at beginning | | | | | | | | 1 | $800,000 | $320,000 | $320,000 | $80000-$320000= | $480,000 | | | | 2 | $480,000 | $192,000 | $512,000 | $480000-$192000= | $288,000 | | | | 3 | $288,000 | $115,200 | $627,200 | $288000-$115200= | $172,800 | | | | 4 | $172,800 | $69,120 | $696,320 | $172800-$69120= | $103,680 | | | | 5 | $103,680 | $13,680 | $710,000 | | | $0 | $90000 Salvage value | | (5th year Depreciation = Book value at the end of 4th year -Salvage Value) | | | | ($103680-$90000= 13680) | | | | | | | | 2 | Book value at the end of 4th year = $103680 | | | | | | | | | Sale value = $ 135000 | | | | | | | | | | Sale value is more than the Book value, Journal entry shall be as follows depecting a profit of $31320 ($135000-$103680): | | Cash Account Debit | | $135,000 | | | | | | | | Accumulated Depreciation Account Debit | $696,320 | | | | | | | | | | Gain on Sale of Equipment Credit | $31,320 | | | | | | | | | Equipment account Credit | $800,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | Book value at the end of 4th year = $103680 | | | | | | | | | Sale value = $ 88750 | | | | | | | | | | Sale value is less than the Book value, Journal entry shall be as follows depecting a loss of -$14930 (88750-$103680): | | Cash Account Debit | | $88,750 | | | | | | | | Accumulated Depreciation Account Debit | $696,320 | | | | | | | | Loss on Sale of Equipment Debit | $14,930 | | | | | | | | | | Equipment account Credit | $800,000 | | | | | | |
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