Depreciation Calculation for Sandblasting Equipment

a. Depreciation Calculation by Straight-Line Method

Depreciation for 20Y5: $900

Depreciation for 20Y6: $3,600

b. Depreciation Calculation by Double-Declining-Balance Method

Depreciation for 20Y5: $2,100

Depreciation for 20Y6: $7,980

Explanation: The computation of the depreciation expense for the second year is shown below:

a) Straight-Line Method:
= ($42,000 - $6,000) ÷ 10 years
= $36,000 ÷ 10 years
= $3,600 (annual depreciation)
For 20Y5 (3 months), depreciation = $900
For 20Y6, depreciation = $3,600

b) Double-Declining-Balance Method:
Depreciation rate = 20%
For 20Y5 (3 months), depreciation = $2,100
For 20Y6, depreciation = $7,980

Questions:

What is the depreciation amount for Sandblasting equipment for the year 20Y5 and 20Y6 by both the straight-line method and double-declining-balance method?

Answers:

a. Depreciation by Straight-Line Method
20Y5: $900
20Y6: $3,600

b. Depreciation by Double-Declining-Balance Method
20Y5: $2,100
20Y6: $7,980