On January 1, a machine with a useful life of five years and a residual value of $50,000 was purchased for $150,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation results in a higher depreciation expense in the early years of an asset's life. The depreciation rate is twice the straight-line depreciation rate. In this case, the straight-line depreciation rate is 10% ($100,000 / 5 years). The double-declining-balance depreciation rate is 20%. The depreciation expense for year 2 is $30,000 ($150,000 x 20%).

On January 1, a Machine with a Useful Life of Five