The machinery account from 2014 to 2016 based on the straight-line and diminishing balance methods will look like:
Machinery a/c
1/1/14 Bank $200,000 12/31/14 Depreciation $20,000
Balance c/d $180,000
$200,000 $200,000
1/1/15 Balance b/d $180,000 12/31/15 Depreciation $20,000
Balance c/d $160,000
$180,000 $180,000
1/1/16 Balance b/d $160,000 12/31/16 Depreciation $20,000
Income Statement - $17,175
Depreciation
adjustment
Balance c/d $122,825
$160,000 $160,000
What is the machinery account balance for the three years?
The depreciation for 2014 and 2015 is:
= 200,000 x 10%
= $20,000
In 2016, the depreciation changes to diminishing balance. The income adjustment will be:
= Balance in 2016 using straight-line - Balance using diminishing balance
= 140,000 - 122,825
= $17,175
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