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Homework answers / question archive / On March 31, 2020 Rats be Gone Inc

On March 31, 2020 Rats be Gone Inc

Accounting

On March 31, 2020 Rats be Gone Inc., purchased equipment for $95,000 that makes rat traps. RBG Inc. also paid $2,300 for frieght and $2,700 for installation. The equipment is expected to last 4 years and have a salvage value of $10,000. RbG Inc expects the machine to produce a total of 30,000 rat traps. 1) ** REQUIRED** Using the same facts related to the equipment purchased for RbG Inc to complete the depreciation schedule using Double Declining Balance Method. Show your work: DDB depr. Rate Beg. NBV Depr. Rate Depr. Exp Accum Depr Ending NBV Year 2020 Apr - Dec 2021 2022 2023 2024
2) Complete an exert of the Balance Sheet Presentation on 12/31/22

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Double Declining Balance Method:

Double Declining Balance method of depreciation is nothing but twice the amount of depreciation calculated by straight line method.

Double Declining Balance Method Formula = 2 X Cost of the asset X Depreciation rate

According to straight line method,

Cost of an asset = 95000+2700+2300

=$100000

Salvage value = $10000

Useful life = 4 years

Depreciation Rate = 1/ Useful Life * 100

= 1/4*100

= 25%

Double Declining Balance Method Formula = 2 X Cost of the asset X Depreciation rate

= 2 x 100000 x 25% x 9/12

Year 1 = $ 37500

DDB Depreciation Rate = 2x25% =50%

Year Beg NBV Depr Rate Dep Expense Accum Dep Ending NBV
2020 Apr-Dec 100000 50% 37500 37500 62500
2021 62500 50% 31250 68750 31250
2022 31250 50% 15625 84375 15625
2023 15625 50% 5625 90000 10000
2024 10000 50% 0 90000 10000

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