## Depreciation:

Depreciation is the manner by which companies expense the wear and tear incurred by their fixed assets over time. Depreciation may be calculated using various methods with the simplest method being the straight-line method. To record depreciation, depreciation expense is debited and accumulated depreciation, a contra-asset account, is credited.

#### Part a)

Year Beginning Book Value Depreciation Expense Ending Book Value
1 $39,500$7,360 $32,140 2$32,140 $7,360$24,780
3 $24,780$7,360 $17,420 4$17,420 $7,360$10,060
5 $10,060$7,360 $2,700 #### Part b) Year Beginning Book Value x DDB Rate (2 x (1 / 5)) = Depreciation Expense Ending Book Value 1$39,500 40% $15,800$23,700
2 $23,700 40%$9,480 $14,220 3$14,220 40% $5,688$8,532
4 $8,532 40%$3,413 $5,119 5$5,119 40% $2,048$3,072

#### Part c)

Straight-Line

 Consideration Received $20,000 Less: Book Value End of Third Year$17,420 Gain on Sale $2,580 Double Declining Balance  Consideration Received$20,000 Less: Book Value End of Third Year $8,532 Gain on Sale$11,468 