Question

Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Reed Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $75,000, and its estimated useful life is five years, after which the expected salvage value is $5,000. For both parts (a) and (b) below: (1) Compute depreciation expense for each year of the machine's five-year useful life under that depreciation method. (2) Use the financial statements effects template to show the effect of depreciation for the first year only for that method. (a) Straight-line $Answer per year Use negative signs with answers below, when appropriate. Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Record first year depreciation Answer Answer Answer Answer Answer Income Statement Revenue - Expenses = Net Income Answer Answer Answer (b) Double-declining Year Depreciation Expense 1 $Answer 2 $Answer 3 $ Answer 4 $Answer 5 $Answer Use negative signs with answers below, when appropriate. Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Record first year depreciation Answer Answer Answer Answer Answer Income Statement Revenue - Expenses = Net Income Answer Answer Answer

Answer 1

Answer:

Compute depreciation expense for each year of the machine's five-year useful life under that depreciation method

Use the financial statements effects template to show the effect of depreciation for the first year only for that method

Explanation:

value 75000    

Life 5 years    

Salvage value 5000    

     

Depreciable amount  70000    

Annual deo rate 100%/5 years  20,00%    

     

Year 1 70000 40% 28.000,0 42.000,0

Year 2 42000 40% 16.800,0  25.200,0

Year 3 25200 40% 10.080,0          15.120,0

Year 4 15120 40% 6.048,0          9.072,0

Year 5 9072 40% 3.628,8         5.443,2

     

first year      

Assets=Liabilities+equity

       assets(Accumulate depreciation)= lianilities (0)+ equity ( net income( revenue-expenses)    

-Accumulate depreciation = expense    

=-42000=-42000