Question

Bramble Corporation purchased machinery on January 1, 2022, at a cost of $300,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $35,000. The company is considering different depreciation methods that could be used for financial reporting purposes.

Required:
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.

Answer 1

Straight-line method

Year Depreciation Book value

1 $66,250 $233,750

2 $66,250 $167,500

3 $66,250 $101,250

4 $66,250 $35,000

Declining-balance method

Year Depreciation Book value

1 $150,000 $150,000

2 $75,000 $75,000

3 $37,500 $37,500

4 $2,500 $35,000