Answer:
a). Depreciation expense for 2018=$6,375, and depreciation expense for 2019=$8,500 using the straight line method
b). Depreciation expense for 2018 is $10,200, and 2019 is also $10,200 using sum-of-the-years'-digits method
c). Depreciation expense for 2018 is $15,750 and the depreciation expense for 2019 is $13,125 using double-declining balance method
Step-by-step explanation:
The expression for the depreciable cost is as follows;
depreciable cost=Acquisition cost-salvage value
where;
acquisition cost=$42,000
residual value=$8,000
replacing;
depreciable cost=42,000-8,000=$34,000
depreciable cost=$34,000
The annual depreciation can be expressed as;
annual depreciation=depreciable cost/estimated life
where;
depreciable cost=$34,000
estimated life=4 years
replacing;
annual depreciation=34,000/4=8,500
annual depreciation=$8,500
Depreciation expense for 2018=(9/12)×8,500=$6,375, since its from March 31, 2018 to end the end of 2018
Depreciation expense for 2019=$8,500
b). sum of year's digit depreciation={4(4+1)}/2=10
This formula yields is equal to the sum of each year of the estimated useful life:
1 + 2 + 3 + 4=10
For;
2018 which is the first year, depreciation expense=(4/10)×depreciable base=0.4×34,000=$13,600 but since its not a full year;
partial depreciation expense for 2018=(9/12)×13,600=$10,200
2019=(3/10)×34,000=$10,200
c).
depreciation rate=(annual depreciation/depreciable cost)×100
depreciation rate=(8,500/34,000)×100=25%
double declining depreciation rate=25%×2=50%
First year depreciation, 2018=42,000×50%×(9/12)=$15,750
Second year depreciation, 2019=(42,000-15,750)×50%=$13,125
Depreciation expense for 2018=$15,750
Depreciation expense for 2019=$13,125