On January 2, 2016, Helmkamp Company purchased a $20,000 machine. It had an estimated useful life of 5 years and a residual value of $2000. What is the amount of depreciation expense for 2017, the second year of the asset's life, using the double declining-balance method? (Round intermediary calculations to two decimal places and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The double declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%. Double that is 40%. For 2016, depreciation is 40% of $20,000 = $8,000. For 2017, depreciation is 40% of ($20,000 - $8,000) = $4,800.

On January 2, 2016, Helmkamp Company Purchased a $20,000 Machine