Napoleon Publishing Group acquired the equipment for $240,000 cash on January 1, 2018. The equipment has an estimated remaining economic life of 12 years and an estimated residual value of $0.

a. Calculate depreciation expense in 2018 and 2019 under the following two methods: Straightline and double-declining-balance.

Method (Depreciation expense) 2018 2019

Straight-line _______________ ______________

Double-declining-balance _______________ ______________

b. The Company disposes of the equipment at the end of 2019 to replace it with new state-of-art equipment. How much gain or loss is reported at disposal if the sale price is $150,000, assuming the Company uses the double-declining balance method?

c. Of these two methods, which method creates the larger expense and larger tax savings in 2019? Briefly explain.