Pine Company purchased a depreciable asset for $360,000.The estimated salvage value is $24,000, and the estimated useful life is 8 years.The double-declining balance method will be used for depreciation.What is the depreciation expense for the second year on this asset?

Question

Quizplus · Accepted Answer

For the double-declining balance method, the annual depreciation expense is calculated as follows:
First-year depreciation expense = (2 / Useful life) x Cost = (2 / 8) x $360,000 = $90,000
Second-year depreciation expense = (2 / Useful life) x Remaining balance from first year = (2 / 8) x ($360,000 - $90,000) = $67,500. Therefore, the correct answer is C.

Pine Company Purchased a Depreciable Asset for $360,000