Redlands, Inc. purchased equipment on January 1, 2011 for $330. Management assumes the equipment will last ten (10) years and will have a $30 residual value at the end of its useful life.

Straight-Line Depreciation

Annual depreciation expense reported on the 2011 and 2012 income statements:

2011 $________________ 2012 $_________________

Balance Sheets

	2011	2012
Historical cost	$330	$330
Less: accumulated depreciation
Net (book or carrying) value

Double-Declining Balance Depreciation

Compute the straight-line depreciation rate:

Double the straight line rate:

Year	Book Value1/1	Depr. Rate	Depr. Expense (I/S)	Book Value12/31
2011
2012

Balance Sheets

	2011	2012
Historical cost	$330	$330
Less: accumulated depreciation
Net (book or carrying) value

Part 2

Assume the same data in part 1 above except that Redlands purchased the equipment on September 1, 2011. Redlands depreciates its equipment to the nearest whole month (1/12 of the year). The firms fiscal year begins on January 1 and ends on December 31.

Straight-Line Depreciation

Annual depreciation expense reported on the 2011 and 2012 income statements:

2011 $________________ 2012 $_________________

Balance Sheets

	2011	2012
Historical cost	$330	$330
Less: accumulated depreciation
Net (book or carrying) value

Double-Declining Balance Depreciation

Compute the straight-line depreciation rate:

Double the straight line rate:

Year	Beg. Book Value	Depr. Rate	Depr. Expense (I/S)	Book Value12/31
9/1/11-12/31/11
1/1/12-12/31/12

Balance Sheets

	2011	2012
Historical cost	$330	$330
Less: accumulated depreciation
Net (book or carrying) value