Chapter 6

Question 8

Freedom Co. purchased a new machine on July 2, 2019, at a total installed cost of $48,000. The machine has an estimated life of five years and an estimated salvage value of $6,600.

Required:

1. Calculate the depreciation expense for each year of theasset'slifeusing:
2. Straight-line depreciation.
3. Double-declining-balance depreciation.
4. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2019, under each method? (Note:The machine will have been used for one-half of its first year of life.)
5. Calculate the accumulated depreciation and net book value of the machine at December 31, 2020, under each method.

A1 Depreciation Expense

Year 1-5

A2 Depreciation Expense

Year 1-5

B Depreciation Expense for

Straight Line______

Double declining balance__________

C

Straight Line Cost 48,000

Accumulated Depreciation_________

Net book value _______

Double declining balance cost 48,000

Accumulated Depreciation_________

Net book value _______