On April 1, Cyclone's Co. purchases a trencher for $310,000. The machine is expected to last five years and have a salvage value of $55,000. Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the double- declining-balance method. (Enter all amounts as positive values.) Depreciation for the Period End of Period Beginning of Period Book Depreciation Rate Partial Depreciation Expense Annual Period Accumulated Year Depreciation Book Value Value Year 1 $ 310,000 40% 9/12 $ 100 $ 100 $ 309,900 Year 2 235,000 40% 12/12 $ 51,000 $ 51,100 $ 258,900 %24

Depreciation:

Depreciation Cost is the cost that is allocated over its life and it is charged as an expense. It is the cost that reduces the value of the asset over its useful life. The cost is reduced because of the use, obsolescence, and wear and tear. Depreciation is charged on tangible assets like plant, equipment, machinery, etc. The land is also an asset, but depreciation is not calculated as it is considered to have an unlimited useful life.

Methods of Calculating Depreciation:

1. Straight Line Depreciation Method
2. Double Declining Balance Method
3. Units of Production Method
4. Sum of the Years' Digit Method