Kam Company purchased a machine on January 2, 2019, for $20,000. The machine had an expected life of 8 years and a residual value of $300. The double-declin balance method of depreciation is used. Required: (If required, round to the nearest dollar.) 1. Compute the depreciation expense for each year of the asset's life and book value at the end of each year. 2019 $ 2020 $ 2021 $ 2022 $ 2023 $ Depreciation Expense 5,000 $ 15,000 ✓ 3,750 $ 11,250 2,813 $ 2,109 ✓ $ 1,582 ✓ $ Book value 8,437 6,328 4,746 ✔
Kam Company purchased a machine on January 2, 2019, for $20,000. The machine had an expected life of 8 years and a residual value of $300. The double-declin balance method of depreciation is used. Required: (If required, round to the nearest dollar.) 1. Compute the depreciation expense for each year of the asset's life and book value at the end of each year. 2019 $ 2020 $ 2021 $ 2022 $ 2023 $ Depreciation Expense 5,000 $ 15,000 ✓ 3,750 $ 11,250 2,813 $ 2,109 ✓ $ 1,582 ✓ $ Book value 8,437 6,328 4,746 ✔
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 4P: Cost of Asset and Depreciation Method Heist Company purchased a machine on January 2, 2019, and uses...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![Changing Depreciation
Kam Company purchased a machine on January 2, 2019, for $20,000. The machine had an expected life of 8 years and a residual value of $300. The double-declining-
balance method of depreciation is used.
Required:
(If required, round to the nearest dollar.)
1. Compute the depreciation expense for each year of the asset's life and book value at the end of each year.
2019 $
2020 $
2021 $
2022 $
2023 $
2024 $
2025 $
2026 $
Depreciation
Expense
5,000
3,750 ✓ $
2,813 ✓ $
2,109 ✓ $
1,582 ✔ $
1,187 $
890 ✓ $
300 X $
Book
value
15,000 ✓
11,250
8,437
6,328
4,746
3,559
2,669 ✓
300](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1e1d114-cba9-4c4f-a9ab-1a346fb28105%2F74dcce92-bdd6-42e2-b4d0-38e7d7efc3f8%2Fk944jre_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Changing Depreciation
Kam Company purchased a machine on January 2, 2019, for $20,000. The machine had an expected life of 8 years and a residual value of $300. The double-declining-
balance method of depreciation is used.
Required:
(If required, round to the nearest dollar.)
1. Compute the depreciation expense for each year of the asset's life and book value at the end of each year.
2019 $
2020 $
2021 $
2022 $
2023 $
2024 $
2025 $
2026 $
Depreciation
Expense
5,000
3,750 ✓ $
2,813 ✓ $
2,109 ✓ $
1,582 ✔ $
1,187 $
890 ✓ $
300 X $
Book
value
15,000 ✓
11,250
8,437
6,328
4,746
3,559
2,669 ✓
300
![2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the asset's life, compute the depreciation expense for each
year of the asset's life. Compute the depreciation using the double-declining-balance through year four, then switch to the straight-line method.
2019: $
2020: $
2021: $
2022: $
2023: $
1,582 X
2024: $
1,187 X
2025: $
890 X
2026: $ 20,000 X
5,000 ✓
3,750 ✓
2,813 ✓
2,109 ✓
3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-
declining-balance amount, compute the depreciation expense for each year of the asset's life.
2019: $
2020: $
2021: $
2022: $
2023: $
2024: $
2025: $
2026: $
5,000 ✓
8,750 X
11,563 X
13,672 X
13,672 X
15,254 X
16,441 X
20,000 X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1e1d114-cba9-4c4f-a9ab-1a346fb28105%2F74dcce92-bdd6-42e2-b4d0-38e7d7efc3f8%2Fkwq003n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the asset's life, compute the depreciation expense for each
year of the asset's life. Compute the depreciation using the double-declining-balance through year four, then switch to the straight-line method.
2019: $
2020: $
2021: $
2022: $
2023: $
1,582 X
2024: $
1,187 X
2025: $
890 X
2026: $ 20,000 X
5,000 ✓
3,750 ✓
2,813 ✓
2,109 ✓
3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-
declining-balance amount, compute the depreciation expense for each year of the asset's life.
2019: $
2020: $
2021: $
2022: $
2023: $
2024: $
2025: $
2026: $
5,000 ✓
8,750 X
11,563 X
13,672 X
13,672 X
15,254 X
16,441 X
20,000 X
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