1 answer

Marigold Corp. purchased a depreciable asset for $710000. The estimated salvage value is $40000, and the...

Question:

Marigold Corp. purchased a depreciable asset for $710000. The estimated salvage value is $40000, and the estimated useful lif
CUEIL ALCHEMO The term depreciable base, or depreciation base, as it is used in accounting, refers to O the cost of the a
Marigold Corp. purchased a depreciable asset for $710000. The estimated salvage value is $40000, and the estimated useful life is 10 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? $142000 $106100 $67000 $113600
CUEIL ALCHEMO The term "depreciable base," or "depreciation base," as it is used in accounting, refers to O the cost of the asset less the related depreciation recorded to date. the total amount to be charged (debited) to expense over an asset's useful life. the estimated market value of the asset at the end of its useful life. the acquisition cost of the asset.

Answers

SOLUTION : 1
CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD
Purchase Cost of Machine $                  7,10,000
Useful Life = 10 years
Depreciation per year = $                      71,000
(Purchase price / Useful life)
CALCULATION OF THE RATE OF DEPRECIATION
Rate of Depreciation = $ 71,000 / $ 710,000
(Depreication / Purchase price )
Rate of Depreciation = 0.10 or 10%
Double decline deprection rate = 10% * 2 = 20%
Purchase price = $                  7,10,000
Depreciation for the year 1 $                  1,42,000
Closing balance for the year 1 $                  5,68,000
Opening Balance for the year 2 $                  5,68,000
Depreciation for the year 2 $                  1,13,600
Closing balance for the year 2 $                  4,54,400
Answer = Option 4 =$ 113,600
SOLUTION : 2
The term "Depreciable base" refers to = The cost of the assets less related depreciation recorded to date
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