Depreciation Methods for Sandblasting Equipment

How can we determine the depreciation for sandblasting equipment using the straight-line and double declining balance methods?

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.

← What you need to know about the new employment relationship Depreciation rate calculation understanding the value of assets →

More Posts: