On January 1 of this year, SportsWorld purchased a new cash register for $5,400. This register has a useful life of 10 years and a residual value of $400. Using thedouble-declining-balance method, how much depreciation expense should SportsWorld recognize for next year?

Question

Quizplus · Accepted Answer

The double-declining-balance method involves doubling the straight-line depreciation rate. The straight-line rate is 1/10 = 10%, so double is 20%. First-year depreciation is 20% of $5,400 = $1,080. For the second year, apply 20% to the book value at the start of the year ($5,400 - $1,080 = $4,320), resulting in $864.

On January 1 of This Year, SportsWorld Purchased a New