What is the "straight line rate?" To obtain this, subtract the $600 residual value from the "new cost," $18,000. Result: $17,400.
The straight line rate would then be $17,400/5, or $3,480; twice that would be $6,960.
After one year, the book value at the end of year 1 would be $18,000-$6,960 = $11,040.
Follow a similar process to find the book value at the end of year 2. Twice the original depreciation at this point would be $6,960, as before. Subtracting this from $11,040 results in a book value at the end of year 2 of $11,040-$6,960= $4,080.
There may be other interpretations dictating what to do here. I'd suggest you look up "declining balance method" and compare it to what we have done here.
