Karen Knoll Co. bought a machine that cost $8,000. The residual value is $1,000, and the machine life is estimated at four years. Can you prepare a depreciation schedule assuming twice the straight-line rate? Karen uses the declining-balance method.

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Quizplus · Accepted Answer

Depr Exp 1:$8,000 × .5 = $4,000; Book Value 1: $8,000 - $4,000 = $4,000;
Depr Exp 2: $4,000 × .5 = $2,000; Acc Depr 2: $2,000 + $4,000 = $6,000; Book Value 2: $4,000 - $2,000 = $2,000;
Depr Exp 3: $2,000 × .5 = $1,000; Acc Depr 3: $1,000 + $2,000 + $4,000 = $7,000;
Book Value 3: $2,000 - $1,000 = $1,000.