Answer:
a). First year depreciation expense=purchase cost×rate=$112,000
b). Second year depreciation expense=$67,200
Explanation:
Step 1
Determine the depreciable value as shown
total depreciable value=purchase cost-salvage value
where;
purchase cost=$280,000
salvage value=$40,000
replacing;
total depreciable value=(280,000-40,000)=$240,000
Step 2
Annual depreciable value=total depreciable value/lifespan
where;
total depreciable value=$240,000
lifespan=5 years
replacing;
Annual depreciable value=240,000/5=$48,000
Step 3
Annual depreciation rate=(annual depreciable value/total depreciable value)×100
annual depreciation rate=(48,000/240,000)×100=20%
But since its double declining=20%×2=40%
First year depreciation expense=purchase cost×rate=(280,000×40/100)=$112,000
Second year depreciation expense=(280,000-112,000)×40%=$67,200
