ACCOUNTING

Year 1: Depreciation expense: $21,000 (70% x $35,000). Explanation: Since the asset has a five year useful life, $35,000 (total cost) is divided by 5 to get the annual depreciation amount of $7,000. Double declining balance method is then used which double the straight-line rate of depreciation, resulting in a rate of 40%. 40% x $35,000 = $14,000depreciation for the year. This amount is then doubled for double-declining-balance depreciation, resulting in a depreciation expense of $21,000 for year 1. Year 2: Depreciation expense: $12,600 (44.4% x $35,000). Explanation: The remaining balance after the first year of depreciation is $13,000 ($35,000 - $22,000). Double declining balance method is then used which double the straight-line rate of depreciation, resulting in a rate of 22.2%. 22.2% x $13,000 = $2,886 depreciation for the year. This amount is then doubled for double-declining-balance depreciation, resulting in a depreciation expense of $12,600 for year 2. Year 3: Depreciation expense: $7,536 (21.6% x $35,000). Explanation: The remaining balance after the second year of depreciation is $8