Answer:
Explanation:
To calculate the depreciation expense for each year of the equipment's life using the diminishing-balance method, we need to first find the straight-line rate, and then find the diminishing-balance rate by doubling the straight-line rate.
Step 1: Calculate the straight-line rate
The straight-line rate can be calculated as follows:
SLR = (Cost - Residual Value) / Useful Life
SLR = (32900 - 4700) / 4
SLR = $27,600 / 4
SLR = $6,900 per year
Step 2: Calculate the diminishing-balance rate
The diminishing-balance rate can be calculated as follows:
DBR = 2 * SLR
DBR = 2 * $6,900
DBR = $13,800
Step 3: Calculate the depreciation expense for each year
The depreciation expense for each year can be calculated as follows:
Year 1: Depreciation Expense = Cost * (DBR / 2)
Year 1: Depreciation Expense = $32,900 * ($13,800 / 2)
Year 1: Depreciation Expense = $32,900 * $6,900
Year 1: Depreciation Expense = $227,621
Year 2: Depreciation Expense = (Cost - Year 1 Depreciation) * (DBR / 2)
Year 2: Depreciation Expense = ($32,900 - $22,761) * ($13,800 / 2)
Year 2: Depreciation Expense = $10,139 * $6,900
Year 2: Depreciation Expense = $70,223
Year 3: Depreciation Expense = (Cost - Year 1 Depreciation - Year 2 Depreciation) * (DBR / 2)
Year 3: Depreciation Expense = ($32,900 - $22,761 - $70,223) * ($13,800 / 2)
Year 3: Depreciation Expense = $10,016 * $6,900
Year 3: Depreciation Expense = $68,609
Year 4: Depreciation Expense = (Cost - Year 1 Depreciation - Year 2 Depreciation - Year 3 Depreciation) * (DBR / 2)
Year 4: Depreciation Expense = ($32,900 - $22,761 - $70,223 - $68,609) * ($13,800 / 2)
Year 4: Depreciation Expense = $21,307 * $6,900
Year 4: Depreciation Expense = $146,763
So, the depreciation expenses for each year of the equipment's life are:
Year 1: $22,761
Year 2: $70,223
Year 3: $68,609
Year 4: $146,763
This is how you can calculate the depreciation expense for each year of the equipment's life using the diminishing-balance method.