A storage tank acquired at the beginning of the fiscal year at a cost of $586,000 has an estimated residual value of $52,000 and an estimated useful life of 10 years. Determine the following: a. the amount of annual depreciation by the straight-line method and b. the amount of depreciation for the first, second, and third years computed by the double-declining-balance method. C. A diesel-powered tractor with a cost of $216,000 and estimated residual value of $39,000 is expected to have a useful operating life of 45,000 hours. During February, the generator was operated 860 hours. Determine the depreciation for the month. d. Prepare the journal entry to record the depreciation under c. above.

Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets due to wear and tear of the assets. Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life of the assetsa. Annual Depreciation = (586000-52000)/10 years = $53,400 b. Double declining depreciation rate = Straight line depreciation rate x 2 = (100/10 years) x 2 = 20% Depreciation for year 1 = Cost of the assets x depreciation rate = $586000*20% = $117,200 Net book value at the end of 1st year = Cost of the assets - Depreciation for year 1 = $586000-117200 = $468,800 Depreciation for year 2 = Net book value at the end of 1st year x depreciation rate = $468,800*20% = $93,760 Net book value at the end of 2nd year = Net book value at the end of 1st year - Depreciation for year 2 = $468800-93760 = $375,040 Depreciation for year 3 = Net book value at the end of 2nd year x depreciation rate = $375,040*20% = $75,008c. Depreciation for the month (Units of production method) =[(cost of Asset - salvage value ) / Total Estimated production]*Actual production = [(216000-39000)/45000]*860 = $3382.67 rounded to $3383 d. Date Accounts Debit Credit Depreciation Expense $3383 Accumulated Depreciation $3383 (To record the depreciation expense)