1. $3,700
2. $8,000 and $6,400
3. $5,120
The computation of the depreciation expense for the years are shown below:
1) Straight-line method:
= (Original cost - residual value) ÷ (useful life)
= ($40,000 - $3,000) ÷ (10 years)
= ($37,000) ÷ (10 years)
= $3,700
In this method, the depreciation is same for all the remaining useful life
So for year 2019 and 2020 the same depreciation expense i.e $3,700 is charged separately for each year
(2) Double-declining balance method:
First we have to find the depreciation rate which is given below:
= One ÷ useful life
= 1 ÷ 10
= 10%
Now the rate is double So, 20%
In year 2019, the original cost is 40,000, so the depreciation is $8,000 after applying the 20% depreciation rate
And, in year 2020, the depreciation is
= ($40,000 - $8,000) × 20%
= $6,400
3) For 2021, it would be
= ($40,000 - $8,000 - $6,400) × 20%
= $5,120
Basically we applied the above formulas
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