Sandblasting equipment acquired at a cost of $36,000 has an estimated residual value of $6,000 and an estimated useful life of 10 years. It was placed into service on April 1 of the current fiscal year, which ends on December 31. Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) the double-declining-balance method.
Answer:
a.
Year 1: 9/12 × [($36,000 – $6,000) ÷ 10] = $2,250
Year 2: ($36,000 – $6,000) ÷ 10 = $3,000
b.
Year 1: 9/12 × 20% of $36,000 = $5,400
Year 2: 20% of ($36,000 – $5,400) = $6,120