Depreciation calculation methods—partial year  Freedom Co.

purchased a new machine on July 2, 2019, at a total installed cost of $132,

years and an estimated salvage value of $18,000.

Required:

a. Calculate the depreciation expense for each year of the asset’s life using:

1. Straight-line depreciation.

2. Double-declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2019, under each me
one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2020, under each method.

Estimated Useful Life

Cost of Machine
Estimated Salvage Life
Amount to be Depreciated

A. Calculate the depreciation expense for each year of the asset’s life using:

1) Straight-line Depreciation:

Annual Depreciation Expense =

Year Depeciation Expense

July to Dec 2019 $11,400.00
Jan to Dec 2020 $22,800.00
Jan to Dec 2021 $22,800.00
Jan to Dec 2022 $22,800.00
Jan to Dec 2023 $22,800.00
Jan to June 2024 $11,400.00

2) Double Declining Balance Depreciation:

Straight-Line Rate=
Double Declining Rate=
Salvage Value=

Net Book Value at the Beginning of Year

Year at Beginning of Year
July to Dec 2019 $132,000.00
Jan to Dec 2020 $105,600.00
Jan to Dec 2021 $63,360.00
Jan to Dec 2022 $38,016.00
Jan to Dec 2023 $22,809.60
Jan to June 2024 $18,000.00

B. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2019, under
 Straight Line: Year
July to Dec 2019

Double Declining:

Year
July to Dec 2019

C. Calculate the accumulated depreciation and net book value of the machine at December 31, 2020, under each method.

Straight Line: Year

July to Dec 2019
Jan to Dec 2020

Double Declining:

Year
July to Dec 2019
Jan to Dec 2020
chine on July 2, 2019, at a total installed cost of $132,000. The machine has an estimated life of five

cal year ended December 31, 2019, under each method? (Note: The machine will have been used for

ecember 31, 2020, under each method.

5 years
$132,000.00
$18,000.00
$114,000.00

$22,800.00 per year

Accumulated Depreciation
$11,400.00
$34,200.00
$57,000.00
$79,800.00
$102,600.00
$114,000.00

20%
40%
$ 18,000.00

Depreciation Rate Depreciation Expense

40% $26,400.00
40% $42,240.00
40% $25,344.00
40% $15,206.40
40% $4,809.60
0% $0.00

o. 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.)
 Depeciation Expense Accumulated Depreciation
$11,400.00 $11,400.00

Net Book Value at the Beginning of Year

at Beginning of Year Depreciation Rate Depreciation Expense
$132,000.00 40% $26,400.00

machine at December 31, 2020, under each method.

Depeciation Expense Accumulated Depreciation

$11,400.00 $11,400.00
$22,800.00 $34,200.00

Net Book Value at the Beginning of Year

at Beginning of Year Depreciation Rate Depreciation Expense
$132,000.00 40% $26,400.00
$105,600.00 40% $42,240.00
 (At End of Year)

Accumulated Depreciation Net Book Value

$26,400.00 $105,600.00
$68,640.00 $63,360.00
$93,984.00 $38,016.00
$109,190.40 $22,809.60
$114,000.00 $18,000.00
$114,000.00 $18,000.00

its first year of life.)

 (At End of Year)

Depreciation Expense Accumulated Depreciation Net Book Value

$26,400.00 $26,400.00 $105,600.00

Net Book Value

$120,600.00
$97,800.00

(At End of Year)

Depreciation Expense Accumulated Depreciation Net Book Value

$26,400.00 $26,400.00 $105,600.00
$42,240.00 $68,640.00 $63,360.00