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## EXERCISE 9-4

 Purpose: (L.O. 2) This exercise will provide an illustration of the computations for depreciation of partial periods using two common methods.

Scanlan Company purchased a new plant asset on April 1, 2014, at a cost of \$690,000. It was estimated to have a service life of 20 years and a salvage value of \$60,000. Scanlan's accounting period is the calendar year.

Instructions

1. Compute the amount of depreciation for this asset for 2014 and 2015 using the straight-line method.
2. Compute the amount of depreciation for this asset for 2014 and 2015 using the double-declining-balance method.
3. Briefly define depreciation as the term is used in accounting.

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