A Kubota tractor acquired on January 8 at a cost of $117,000 has an estimated useful life of 10 years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. First Year Second Year $ $ b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answers to the nearest dollar.

a. STRAIGHT LINE METHOD:

First Year $11,700

Second Year $11,700

b. DOUBLE-DECLINING-BALANCE METHOD:

First Year $23,400

Second Year $18,720

Explanation:

Total Cost = $117,000

Useful Life = 10 years

Residual Value = $0

a. STRAIGHT LINE METHOD:

Depreciation Expense = (Total Cost - Residual Value) / Useful Life

Depreciation Expense = ($117,000 - $0) / 10 years

Depreciation Expense = $117,000 / 10 years

Depreciation Expense = $11,700 per year

Hence, Depreciation Expense for first year = $11,700

& Depreciation Expense for second year = $11,700

as per straight line method.

b. DOUBLE-DECLINING-BALANCE METHOD:

Depreciation Expense Rate = (100% / Useful Life) x 2

Depreciation Expense Rate = (100% / 10 years) x 2

Depreciation Expense Rate = 20%

Hence, Depreciation Expense for first year = $117,000 x 20% = $23,400

& Depreciation Expense for second year = ($117,000 - $23,400) x 20%

Depreciation Expense for second year = $93,600 x 20% = $18,720

as Double-Declining-Balance method.

N.B. In Double-Declining-Balance method Kubota tractor will be depreciated as long as the depreciation expense is equal to residual value, which in this case is $0.

the correct answer is b. deductible. hope this