On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $320,000. The machine is expected to last five years and have a salvage value of $60,000.

On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $320,000. The machine is expected to last five years and have a salvage value of $60,000.
Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the straight-line method.

Explanation
Straight-line depreciation for 2016
[($320,000 – $60,000) / 5 years] × 9 / 12 = $39,000
  
Straight-line depreciation for 2017
($320,000 – $60,000) / 5 years = $52,000

On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $320,000. The machine is expected to last five years and have a salvage value of $60,000.
Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the double-declining-balance method.
 
Explanation

Double-declining-balance depreciation for 2016 and 2017:
Rate = (100% / 5 years) × 2 = 40%
Depreciation for 2016 ($320,000 × 40% × 9/12) = $96,000
Book value at January 1, 2017 ($320,000 – $96,000) = $224,000
Depreciation for 2017 ($224,000 × 40%) = $89,600

Alternate calculation

2016 depreciation ($320,000 × 40% × 9/12)	$	96,000
2017 depreciation
$320,000 × 40% × 3/12	$	32,000
($320,000 – $96,000 – $32,000) × 40% × 9/12		57,600
Total 2017 depreciation	$	89,600

  

Thank you!