Depreciation by Two Methods A Kubota tractor acquired on January 8 at a cost of

Question

Depreciation by Two Methods A Kubota tractor acquired on January 8 at a cost of $108,000 has an estimated useful life of ten years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. First Year Second Year b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answer to the nearest dollar First Year Second Year

Explanation / Answer

a) Calculate depreciation expense under straight line method :

First year = 108000/10 = 10800

Second year = 10800

b) Calculate depreciation expense under double decline balance :

Double decline rate = 100/10*2 = 20%

First year = 108000*20% = 21600

Second year = 108000*80%*20% = 17280

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