Answer:
2021
Depreciation expense = $64,000
2022
Depreciation expense = $48,000
2023
Depreciation expense = $52,000
2024
Depreciation expense = $51,000
2025
Depreciation expense = $10,250
2026
Depreciation expense = $10,250
2027
Depreciation expense = $10,250
2028
Depreciation expense = $10,250
Explanation:
Depreciation Charge using the double-declining-balance (DDB) method is determined as follows :
Depreciation Charge = 2 x SLDP x BVSLDP
where,
SLDP = 100 ÷ Number of useful life
= 100 ÷ 8
= 12.5 %
and
BVSLDP = cost (in first year) and Book Value thereafter.
therefore,
2021
Depreciation expense = 2 x 12.5 % x $256,000 = $64,000
2022
Depreciation expense = 2 x 12.5 % x ($256,000 - $64,000) = $48,000
2023
Depreciation expense = 2 x 12.5 % x ($256,000 - $48,000) = $52,000
2024
Depreciation expense = 2 x 12.5 % x ($256,000 - $52,000) = $51,000
Now from 2024 we have to switch to straight line method
With Straight Line Method, we charge a fixed amount of depreciation using the formula :
Depreciation expense = (Cost - Residual Value) ÷ Remaining Useful life
But since we have provided for depreciation expenses before, we have to reduce the cost by $215,000 (accumulated depreciation to date). Also we reduce the remaining useful life by the years expired to 4 years.
2025
Depreciation expense = ($256,000 - $215,000) ÷ 4 = $10,250
2026
Depreciation expense = ($256,000 - $215,000) ÷ 4 = $10,250
2027
Depreciation expense = ($256,000 - $215,000) ÷ 4 = $10,250
2028
Depreciation expense = ($256,000 - $215,000) ÷ 4 = $10,250
