A plant asset cost $288000 and is estimated to have a $36000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be
A) $24120.
B) $40500.
C) $35436.
D) $27570.

Question

Quizplus · Accepted Answer

The double-declining-balance method accelerates depreciation, calculating it as (2/useful life) * book value at the beginning of the year. For the first year, the depreciation is (2/8)*$288,000 = $72,000. The book value then becomes $288,000 - $72,000 = $216,000. For the second year, depreciation is (2/8)*$216,000 = $54,000, making the new book value $216,000 - $54,000 = $162,000. For the third year, depreciation is (2/8)*$162,000 = $40,500.

A Plant Asset Cost $288000 and Is Estimated to Have