Homework Answers
| Year | Straight-Line | Double - Declining balance |
| 2020 | $ 29,025.00 | $ 86,000.00 |
| 2021 | $ 38,700.00 | $ 51,600.00 |
Explanation
| Straight Line Depreciation | |||||
| (Cost - Salvage Value) | / | Useful Life | = | Annual Depreciation | |
| (215,000 - 21,500) | / | 5 | = | $ 38,700.00 | |
| Year | Annual Depreciation | x | Fraction Year | = | Depreciation Expense |
| 2020 | 38,700.00 | x | 9/12 | = | $ 29,025.00 |
| 2021 | 38,700.00 | x | 12/12 | = | $ 38,700.00 |
| Double Declining Balance Depreciation | |||||
| Beginning book value | x | Double the straight- | = | Depreciation expense | |
| line rate | |||||
| 2020 | 215,000.00 | x | 40% | = | 86,000.00 |
| 2021 | 129,000.00 | x | 40% | = | 51,600.00 |
| Double-declining-balance rate = (100% / 5 years) × 2 = 40% per year | |||||
| 2020 depreciation = $215,000 × 40% = $86,000 | |||||
| Book value at beginning of second year = $215,000 – $86,000 = $129,000 | |||||
| 2021 depreciation = $129,000 × 40% = $51,600 | |||||
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