On 1 May 20X2, Express Shipping Company (ESC) paid $21,208,600 for land and a warehouse built on
Question:
On 1 May 20X2, Express Shipping Company (‘ESC’) paid $21,208,600 for land and a warehouse built on it. An appraisal indicated that the land’s fair value was $15,149,000 and the warehouse’s fair value was $11,361,750. ESC estimated that the warehouse can be used for 6 years and will have a salvage value of $250,500. In trying to decide which depreciation method to use for the warehouse, ESC’s management
has requested a depreciation schedule of straight-line and double- declining-balance depreciation methods. The fiscal year-end of ESC is 31 December.
2 Prepare a depreciation schedule for the warehouse using the double- declining-balance method showing the calculation of depreciation expense, accumulated depreciation, and asset book value. Round your numbers to the nearest integer.
3 Explain why the units-of-production method is not suitable for recording the depreciation of the warehouse.
Expert Answer:
Depreciation refers to the concept which evaluates the decline rate of an asset until i... View the full answer
