The cost of an asset is $1,020,000, and its residual value is $160,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Double-declining-balance rate = 2 x (100%/5) = 40%
Depreciation for Year 1 = $1,020,000 x 40% = $408,000
Book value at the beginning of Year 2 = $1,020,000 - $408,000 = $612,000
Depreciation for Year 2 = $612,000 x 40% = $244,800 (rounded to the nearest dollar)

The Cost of an Asset Is $1,020,000, and Its Residual