Warren Company plans to depreciate a new building using the double declining-balance depreciation method.The building cost is $800,000.The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly,what would be the amount of depreciation expense for the second year?
A)$30,720.
B)$32,000.
C)$58,880.
D)$64,000.

Question

Quizplus · Accepted Answer

The double declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/25 = 4%. Double that is 8%. First-year depreciation: $800,000 * 8% = $64,000. Second-year depreciation: ($800,000 - $64,000) * 8% = $58,880.

Warren Company Plans to Depreciate a New Building Using the Double