Purchase Solution

Depreciation : Straight-Line, Double-Declining Balance..etc

Not what you're looking for?

Ask Custom Question

Cutter Enterprises purchased equipment for $72,000 on January 1, 2006. The equipment is expected to have a five-year life, with a residual value of $6,000 at the end of five years.

1. Using the straight-line method, depreciation expense for 2006 would be:
A) $13,200
B) $14,400
C) $72,000
D) None of the above is correct.

2. Using the straight-line method, depreciation expense for 2007 and the equipment book value at December 31, 2007 would be:
A) $14,400 and $43,200.
B) $28,800 and $37,200.
C) $13,200 and $39,600.
D) $13,200 and $45,600.

3. Using the double-declining balance method, depreciation expense for 2006 and the book value at December 31, 2006 would be:
A) $26,400 and $45,600.
B) $28,800 and $43,200.
C) $28,800 and $37,200.
D) $26,400 and $36,600.

4. Using the sum-of-the-years'-digits method, depreciation expense for 2006 and book value at December 31, 2006 would be:
A) $22,000 and $44,000.
B) $22,000 and $50,000.
C) $24,000 and $48,000.
D) $24,000 and $42,000.

Purchase this Solution
Solution Summary

Solution for depreciation using Straight-Line, Double-Declining Balance and Sum-of-Years' Digits

Solution Preview

Cutter Enterprises purchased equipment for $72,000 on January 1, 2006. The equipment is expected to have a five-year life, with a residual value of $6,000 at the end of five years.

1. Using the straight-line method, depreciation expense for 2006 would be:
A) $13,200
B) $14,400
C) $72,000
D) None of the above is correct.

Annual Dep = purchase price - ending price / useful life

= 72000 - 6000 / 5
= $13,200 (option A)

2. Using the ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Probability Quiz

Some questions on probability

Exponential Expressions

In this quiz, you will have a chance to practice basic terminology of exponential expressions and how to evaluate them.

Know Your Linear Equations

Each question is a choice-summary multiple choice question that will present you with a linear equation and then make 4 statements about that equation. You must determine which of the 4 statements are true (if any) in regards to the equation.

Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management

    The straight line depreciation rate is 25% (100% / 4 years). To calculate depreciation from double declining balance method, the depreciation rate will be double the straight line depreciation rate i.e. 50% (Eisen, 2003).

  • Depreciation -straight-line versus double declining-balance

    = $12,440 =$20,000 - $7,560 Answer: Gain using Straight line= $4,200 Double Declining= $12,440 Calculates depreciation expenses using straight-line and double declining-balance depreciation

  • Straight Line, Unit of Production and Double Declining

    rate of Depreciation under Double Declining Balance Method: It is double or two times of the straight line method Rate Double Declining Balance Rate = 2 X 20%= 40% Table showing Amount of depreciation Expense recognized for 5 years using

  • Double - Declining Balance

    The double declining balance depreciation method is like the straight-line method on steroids. To use it, accountants first calculate depreciation as if they were using the straight line method.

  • Computing Depreciation Expense for a Machine

    This solution helps compute depreciation expense for a machine using straight line and double declining methods.

  • Calculating Depreciation

    The solution explains how to calculate depreciation using Straight-line, Sum of the years' digits and Double declining balance method

  • Precision Manufacturing: Computing Depreciation

    It contains following parts. 1 1 Calculation of annual deprecition under Straight line Method 2 Calculation of rate of Depreciation under Double Declining Balance Metod: 3 Calculation of 5 years depreciation under straight line method:

  • Straight line and Double declining method of depreciation

    depreciation = $_______________. 22500 2008 depreciation = $_______________. 22500 (b) Double-declining-balance Double Declining Balance-- This method uses twice the straight-line percentage for

  • Depreciation Computation

    Calculate the amount of depreciation expense for the 2008 income statement. Please see the attached file. The solution explains the depreciation calculations under Straight-line, Sum of Year, Double Declining Balance methods

  • Change in Accounting Method

    This solution illustrates how to compute the depreciation expense in the year in which a company changes its accounting method. It also illustrates how to compute depreciation using the straight-line and double-declining balance methods.

View More Related Solutions