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    Smonique26's Avatar
    Smonique26 Posts: 1, Reputation: 1
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    #1

    Jun 28, 2009, 04:48 PM
    Declining balance depreciation
    Declining balance depreciation
    On July 6, 2007, Bennington purchased new machinery with an estimated useful life of 10 years. Cost of the equipment was $50,000, with a residual value of $5,000.
    Compute the depreciation on this machinery in 2007 and 2008 using each of the following methods.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    Jul 1, 2009, 04:24 AM

    You have not mentioned the methods of depreciation. However, here goes
    (a) Straight line method: (50,000-5,000)/10 =4,500 for each year
    (b) Reducing balance method:
    2007 - 50,000 x20% = 10,000
    2008: 40,000 x 20% 8,000
    (c) Sum of the years digit:
    2007 - 45,000x10/55= 8,182
    2008 - 45,000x9/55 = 7,364
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