EX 10-14 Partial-year depreciation

Sandblasting equipment acquired at a cost of $64,000 has an estimated residual value of $4,000 and an estimated useful life of eight years. It was placed in service on April 1 of the current fiscal year, which ends on December 31. Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) the double-declining-balance method.

Answer:
a. Year 1: 9/12 × [($64,000 – $4,000)/8] = $5,625
   Year 2: ($64,000 – $4,000)/8 = $7,500
b. Year 1: 9/12 × 25% of $64,000 = $12,000
   Year 2: 25% of ($64,000 – $12,000) = $13,000

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