E11-11 - Depreciation expense 230,400 Building 230,400 (b)...

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(a) The straight line depreciation rate is 1/25 = 4%. After 5 years, the building value is 4,000,000 - 5*0.04*(4,000,000 - 400,000) = 3,280,000. The depreciation expense for 2008 with double-declining method would hence be (3,280,000 - 400,000)*4%*2 = 230,400. Therefore the entry would look like
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Unformatted text preview: Depreciation expense 230,400 Building 230,400 (b) After 5 years, the value of the machinery would be 500,000 - 5*(500,000/10) = 250,000. Switching to 8 years means that there are 3 years left to depreciate it. Hence the depreciation expense for 2008 would be: (250,000 - 25,000)/3 = 75,000....
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This note was uploaded on 09/11/2009 for the course ACC 362 taught by Professor Wormer during the Spring '07 term at University of Phoenix.

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