A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000.Under the double-declining-balance method,the depreciation expense for the first year of the asset's useful life is

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The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 or 20%, so double is 40%. First-year depreciation is 40% of $50,000, which is $20,000.

A Firm Purchases an Asset for $50,000 and Estimates That