Delta Company purchased a piece of equipment for $400,000. The equipment has an eight-year useful life and zero residual value. The company uses the double declining balance method for depreciating equipment. After using and depreciating the equipment for two years, the company obtained an appraisal that put the value of the equipment at $320,000, and the company revalued the equipment to that amount. Despite the revaluation, Delta’s management believed the existing depreciation policy and rate to be reasonable.
Required:
Compute the amount of depreciation expense for each of the first two years and for each of the two years after the revaluation.