Problem 99A Part Level Submission Ayayai Corporation purchas

Problem 9-9A (Part Level Submission)

Ayayai Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $24,000. The company is considering different depreciation methods that could be used for financial reporting purposes.

(a)

STRAIGHT-LINE DEPRECIATION

Computation

End of Year

Years

Depreciable Cost

Depreciation Rate

Annual Depreciation Expense

Accumulated Depreciation

Book Value

2017

2018

2019

2020

DOUBLE-DECLINING-BALANCE DEPRECIATION

Computation

End of Year

Years

Book Value Beginning of Year

Depreciation Rate

Annual Depreciation Expense

Accumulated Depreciation

Book Value

2017

2018

2019

2020

7,250

Can I get some help on this one, thanks

Problem 9-9A (Part Level Submission) Ayayai Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $24,000. The company is considering different depreciation methods that could be used for financial reporting purposes. (a) Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. STRAIGHT-LINE DEPRECIATION Computation End of Year Years Depreciable Cost x Depreciation Rate = Annual Depreciation Expense Accumulated Depreciation Book Value 2017 $enter a dollar amount enter a Depreciation Rate in percentages % $enter a dollar amount $enter a dollar amount $enter a dollar amount 2018 enter a dollar amount enter a Depreciation Rate in percentages % enter a dollar amount enter a dollar amount enter a dollar amount 2019 enter a dollar amount enter a Depreciation Rate in percentages % enter a dollar amount enter a dollar amount enter a dollar amount 2020 enter a dollar amount enter a Depreciation Rate in percentages % enter a dollar amount enter a dollar amount enter a dollar amount $enter a total for the Annual Depreciation Expense column in dollars DOUBLE-DECLINING-BALANCE DEPRECIATION Computation End of Year Years Book Value Beginning of Year × Depreciation Rate = Annual Depreciation Expense Accumulated Depreciation Book Value 2017 $enter a dollar amount enter a Depreciation Rate in percentages % $enter a dollar amount $enter a dollar amount $enter a dollar amount 2018 enter a dollar amount enter a Depreciation Rate in percentages % enter a dollar amount enter a dollar amount enter a dollar amount 2019 enter a dollar amount enter a Depreciation Rate in percentages % enter a dollar amount enter a dollar amount enter a dollar amount 2020 enter a dollar amount enter a Depreciation Rate in percentages % 7,250 * enter a dollar amount enter a dollar amount $enter a total for the Annual Depreciation Expense column in dollars * Depreciation expense for 2020 under Double declining-balance is adjusted so that ending book value is equal to salvage value. Can I get some help on this one, thanks

Solution

(A) Depreciation Schedules Under Straight line method Depreciation rate under straight line method = 1/ Useful life of asset =1/4 =25% Depreciable cost = Cost of the Asset - Salvage value =$250,000 -$24000 =$226,000 End of the year Year Depreciable cost X   Depreciation rate =Annual Depreciation Expense Accumulated Depreciation Book Vlaue 2017 $226000 X 25% =$56500 $56500 $193500 (250,000-56500) 2018 $226000 X 25% =$56500 $113000 $137000 (193500-56500) 2019 $226000 X 25% =$56500 $169500 $80500 (137000-56500) 2020 $226000 X 25% =$56500 $226000 $24000 (80500-56500) (B) Depreciation Schedules Under Double declaing balance method Depreciation rate under Double declaing Balance method =2* Straight line ethod =2*25% =50% Double Declaing balance method Computation End of the year Year Book Value Beginning of the year X Depreciation rate = Annual Depreciation Accumulated Depreciation Book Vlaue 2017 $250,000 X50% =$125000 $125000 $125000 2018 $125000 X50% =$62500 $187500 $62500 2019 $62500 X50% =$31250 $218750 $31250 2020 $31250 =$7250 $226,000 $24000 **2020 Depreciation adjusted to salavage value of the Asset = Book Vlaue beginning 2020 - Salvage value =$31250 - $24000 =$7250