Answer:
a. Annual depreciation = $3,800
b. First year depreciation is $8,000' while second year depreciation is $7,200.
Explanation:
a. Determine the amount of annual depreciation by the straight-line method.
Depreciable amount = $80,000 - $4,000 = $76,000
Annual depreciation = $76,000 / 20 = $3,800
b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.
Straight line depreciation rate = 1 / 20 = 0.05, or 5%
Double declining depreciation rate = 5% * 2 = 10%
First year depreciation = $80,000 * 10% = $8,000
Second year depreciation = ($80,000 - $8,000) * 10% = $7,200
