Business, 24.06.2020 19:01 bankscorneliuso39

On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $50,125. The expenditures made to acquire the asset were as follows: Purchase price $220,000
Freight charges 6800
Installation charges 10,000

Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life.

Required:
Calculate depreciation for each year of the asset's eight-year life.

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Answer from: katiems5514

Jackson Company

Calculation of the Depreciation for each year:

a) Using the double-declining-balance (DDB) method of depreciation:

1st year, the depreciation charge = $59,200 ($236,800 x 25%)

2nd year, the depreciation charge = $44,400 ($236,800 - 59,200) x 25%

3rd year, the depreciation charge = $33,300 ($236,800 - 103,600) x 25%

4th year, the depreciation charge = $24,975 ($236,800 - 136,900) x 25%

5th year, the usage of straight-line method commences:

Depreciation charge = $58,100/4 = $14,525

6th year, depreciation charge = $14,525

7th year, depreciation charge = $14,525

8th year, depreciation charge = $14,525

Explanation:

a) Asset's recognized cost:

Purchase price $220,000

Freight charges 6,800

Installation charges 10,000

Total cost = $236,800

b) Useful life = 8 years, with salvage value of $50,125.

c) Double-declining balance depreciation rate = 25% (100/8 * 2)

d) Accumulated Depreciation at the end of:

1st year = $59,200

2nd year = $103,600 ($59,200 + 44,400)

3rd year = $136,900 ($103,600 + 33,300)

4th year = $128,575 ($136,900 + 24,975)

5th year = $143,100 ($128,575 + 14,525)

6th year = $157,625 ($143,100 + 14,525)

7th year = $172,150 ($157,625 + 14,525)

8th year = $186,675 ($172,150 + 14,525)

e) Book value of asset at the end of the fourth year:

Cost = $236,800

Accumulated depreciation $128,575

Book value = $108,225

Salvage value = $50,125

Straight-line depreciable amount = $58,100

f) The double-declining-balance depreciation method is an accelerated depreciation method that expenses the cost of an asset more rapidly by multiplying the straight-line method's rate by 2 and applying this rate on the reducing balance. On the other hand, the straight-line depreciation method uses the same amount of depreciation each year over an asset's useful life. The double-declining balance method does not take into consideration the salvage value unlike the straight-line depreciation method until towards the end of the useful life of the asset.

Answer from: Quest

answer: 11/12

step-by-step explanation: 4 1/4 and 3 1/3 is equivalent to 4 3/12 and 3 4/12. 4 3/12 - 3 4/12 =11/12

Answer from: Quest

$11,000 is the answer you are looking for

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On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process....

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