On July 2, 2019, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful life of six years and an estimated residual value of $30,000. Depreciation is taken for the portion of the year the asset is used. The asset is a Class 8 asset with a maximum CCA rate of 20%. Vicuna has a December year end.

Instructions

a) Complete the schedule below by determining the depreciation expense/CCA and year-end book values/UCC for 2019 and 2020 using the

1.double-declining-balance method.

2.capital cost allowance method (using maximum rate).

Double-Declining-Balance Method20192020

Depreciation expense for year

Accumulated depreciation

Year-end book value

Capital Cost Allowance Method 2019 2020

CCA for year

End of year UCC

Total CCA claimed

b) Instead, assume Vicuna used straight-line depreciation during 2019 and 2020. During 2021, the company determined that the equipment would be useful to the company for only one more year beyond 2021. Residual value is estimated at $40,000. Calculate the amount of depreciation expense for the 2021 income statement.