Mon-Royal Co. purchased equipment on January 1, 2017 for $3,000,000 and paid cash for $2,000,000 and issued a 2-year note payable for the rest. Mon-Royal Co. also paid $20,000 cash for shipping and installation of the equipment.

Other information

• Estimated useful life of the equipment at the time of purchase, 10 years.
• Estimated salvage (residual) value at the time of purchase, $320,000.
• The company uses the straight-line method of depreciation.
• The companys fiscal year coincides with the calendar year.
• On January 1, 2019 the equipment needed a major repair. The company paid $400,000 to repair the equipment. Based on an expert opinion, the repair will increase the useful life of the equipment for two years, however the residual value remains the same.
• On July 1, 2020 the company sold the equipment for $2,400,000 cash.

Assume for this part , the company uses double-declining method of depreciation. Calculate the amount of depreciation expense for the year 2017 and 2018.

a. $483,200 for year 2017 and $604,000 for year 2018.

b. $500,000 for year 2017 and $400,000 for year 2018.

c. $604,000 for year 2017 and $483,200 for year 2018.

d. None.