PART I
1. Straight-line method
Deprecation per year (36000-6000)/10=3000
The depreciation expense for 2006 is $3,000. The book value at the end of 2006 is $33,000.
The depreciation expense for 2007 is $3,000. The book value at the end of 2007 is $30,000.

2. Double declining balance method
Declining rate is 1/10*2=20%
Year Depreciation Expense Book Value 36,000
2006 20% 7,200 28,800
2007 20% 5,760 23,040

3. Sum of the years’ digits method
Depreciation base is 30,000
Year SYD Fraction Depreciation Expense Book Value 36,000
2006 10/55 5,454.55 30,545.45
2007 9/55 4,909.09 25,636.36

4. Units of production method
Depreciation expense in 2006 is (36,000-6,000)*(25,000/500,000)=1,500. The book value at the end of 2006 is 34,500.
Depreciation expense in 2007 is (36,000-6,000)*(84,000/500,000)=5040. The book value at the end of 2007 is 29,460.

PART II
1.
Date Amount Weight AAE
2/1/11 1,050,000 11/12 962,500
3/31/11 900,000 9/12 675,000
6/1/11 750,000 7/12 437,500
10/1/11 1,000,000 3/12 250,000 3,700,000 2,325,000
The accumulated average expenditure in 2011 is $2,325,000.

2. Since AAE is less than the specific borrowing