CMA Study Group

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  • 1.  Part 1

    Posted 11-16-2024 04:26 AM

    Maple Industries purchased a lathe on June 1, Year 1, the beginning of the fiscal year. The lathe cost $43,200 and has an estimated salvage value of $3,600 and an estimated useful life of 8 years. The lathe has been used throughout the year.

    Assuming that Maple Industries calculates depreciation to the nearest whole month on all assets purchased or sold during the year, the amount of double-declining- balance (DDB) depreciation that would be taken for financial reporting purposes in the fiscal year ending May 31, Year 3 in the second year of the asset's life would

    • A. $9,900

    • B. $7,425

    • C. $8,100

    • D. $10,800 



    ------------------------------
    Muhammed Shamil Kalathingal
    Student
    Kozhikode
    India
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  • 2.  RE: Part 1

    Posted 11-17-2024 02:20 AM
    DDB method depreciation is calculated as 
    book value of the asset at the beginning of the period x twice the straight line percentage. useful life is 8 years so its 12.5% per year.
    so we will use 25% for depreciation calculation (twice the straight- line percentage i.e. 12.5% x 2=25%)
    for year 1 depreciation expense is $43,200 * 25% = $10,800
    So the carrying value would be $32,400 (43,200 -$10,800)
    In year 2,the depreciation expenses is $32,400*25% = $8100
    Answer is C ($8100)





  • 3.  RE: Part 1

    Posted 11-17-2024 04:38 AM

    the answer    a-$9,900






  • 4.  RE: Part 1

    Posted 11-17-2024 04:40 AM

    A-$ 9,900



    ------------------------------
    Mohammed Mabrouk
    Chief Financial Officer
    ALEXANDRIYA
    Egypt
    ------------------------------



  • 5.  RE: Part 1

    Posted 11-17-2024 10:04 AM
    Mr.Mohammed Mabrouk
    Can you please explain how did you get the answer i.e. $9,900



    Original Message


  • 6.  RE: Part 1

    Posted 11-17-2024 06:11 AM
    Edited by Wesam Zaqout 11-17-2024 06:13 AM

    The answer is C. $8,100, the beginning of the fiscal year is June 1, Year 1. Using the Double Declining Balance or any other accelerated depreciation method do not deduct the salvage value, and the new depreciable base is the new carrying amount after deducting the depreciation expense 



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    Wesam Zaqout
    Other
    Al Ain
    United Arab Emirates
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  • 7.  RE: Part 1

    Posted 11-26-2024 07:42 PM

    It is my understanding that the salvage value is not taken into consideration with the double declining method- so the correct answer is (C)



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    Brooklyn Richardson
    Accountant
    Harriman TN
    United States
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    Original Message


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