Question

XYZ Company purchased a new machine on January 1, 2020 for $160,000. The machine was assigned a 40-year life and a $3,000 residual value. XYZ Company will depreciate the machine using the double-declining balance depreciation method. Calculate the amount of accumulated depreciation related to the new machine that would appear in XYZ Company's December 31, 2023 balance sheet.

Answer 1

Accumulated depreciation at December 32, 2023 = 29679

Step-by-step explanation:

machine = 160000

useful life = 40 years

residual value = 3000

straight-line depreciation rate = (160000 - 3000) ÷ 40

= 3925 per year

Annual depreciation rate = 100% ÷ 40 = 2.5%

double-declining rate = 2 × 2.5% = 5%

Depreciation for 2020 = 5% × 160000 = 8000

Depreciation for 2021 = 5% × (160000 - 8000) = 7600

Depreciation for 2022 = 5% × (160000 - 8000 - 7600) = 7220

Depreciation for 2023 = 5% × (160000 - 8000 - 7600 - 7220) = 6859

Accumulated depreciation at December 32, 2023

= 8000 + 7600 +7220 + 6859

= 29679