Question

Assignment # 4 :

Equipment costing $76,000 was purchased by Spence, Inc., at the beginning of the current year.
The company will depreciate the equipment by the declining-balance method, but it has not determined
whether the rate will be at 150 percent or 200 percent of the straight-line rate. The estimated
useful life of the equipment is eight years. Prepare a comparison of the two alternative rates for
management for the first two years Spence owns the equipment. Plz solve the question ہ

Answer 1

Explanation:

generally the depreciation will be 76000/8 ie., 9500

as per condition will take dep. as

1) 9500*150/100 = 14250

By the end of 1st yr its value will be 61750

By the end of 2nd yr it becomes 50171.875

and it goes like that....

2) 9500*200/100 = 19000

By the end of 1st yr the value become 57000

by the 2nd yrs end it becomes 42750

and goes ...

I think this is how it goes as per my knowledge