Freedom Co. purchaseda new machine on July 2, 2016, at a total installed cost of$49,000. The machine has an estimated life of five years and anestimated salvage value of $6,700.
Required:
a-1.Calculate the depreciation expense for each year of the asset'slife using Straight-line depreciation.
| Year | Depreciation Expense |
| 1 | $8,460 |
| 2 | $8,460 |
| 3 | $8,460 |
| 4 | $8,460 |
| 5 | $8,460 |
a-2.Calculate the depreciation expense for each year of the asset'slife using Double-declining-balance depreciation.
| Year | Depreciation Expense |
| 1 | $19,600 |
| 2 | $11,760 |
| 3 | $7,056 |
| 4 | $3,884 |
| 5 | $0 |
b.How much depreciation expense should be recorded by Freedom Co. forits fiscal year ended December 31, 2016, under each method?(Note: The machine will have been used for one-half of itsfirst year of life.)
| Depreciation Expense |
| Straight?line | $4,230 |
| Double-declining balance | $9,800 |
c.Calculate the accumulated depreciation and net book value of themachine at December 31, 2017, under each method.
| Cost | Accumulated Depreciation | Net BookValue |
| Straight?line | $49,000 | $0 | $0 |
| Double-declining?balance | 49,000 | 0 | 0 |
