Depreciation Methods for Sandblasting Equipment
The straight-line method allocates an equal amount of depreciation expense each year, while the double declining balance method calculates higher depreciation in the earlier years of an asset's life.
Straight-Line Method
The straight-line method of depreciation allocates depreciation expense evenly across the useful life of an asset. To calculate the depreciation for sandblasting equipment in 2015 and 2016 using this method:
Depreciation 2015:($109,000 - $7,000) / 5 years = $20,400 per year
Depreciation 2016:($109,000 - $7,000) / 5 years = $20,400 per year
Double Declining Balance Method
The double declining balance method accelerates depreciation, with higher expenses in the early years. To calculate the depreciation for sandblasting equipment in 2015 and 2016 using this method:
Depreciation 2015:Beginning Book Value: $109,000
Depreciation Rate: 2 * (1/5) = 40%
Depreciation Expense: $109,000 * 40% = $43,600
Depreciation 2016:Beginning Book Value: $109,000 - $43,600 = $65,400
Depreciation Expense: $65,400 * 40% = $26,160
Using the double declining balance method, you can see the higher depreciation expense in the first year, which gradually decreases over time.