A pressurized spray painter was purchased on september 1 of the fiscal year for $4800 it has a useful life of 4 years and a residual value of $500 determine depreciation expense for the first two years assuming a fiscal year end of december 31 and using the straight line method and the declining balance method

Using the straight-line method: $2,150

Using the declining balance method: $3,600

Explanation:

The double-declining method is otherwise known as the reducing balance method and is given by the formula below:

Double declining method = 2 X SLDP X BV

SLDP = straight-line depreciation percentage

BV = Book value

Under straight-line method, depreciation expense is (cost - residual value) / No of years = ($4,800 - $500) / 4 years = $1,075 yearly depreciation expense. Therefore, first two years would be $1,075 x 2 years = $2,150.

Under the double-declining method, 100%/4years = 25%, then 25% multiplied by 2 to give 50%

At Year 1, 50% X $4,800 = $2,400

At Year 2, 50% X $2,400 ($4,800 - $2,400) = $1,200

Therefore, first two years would be $3,600.

The depreciation expense would stop at a stage when amount falls below the residual value.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.