Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400.
-What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

Question

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. 
-What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

Quizplus · Accepted Answer

First, we need to determine the annual depreciation rate using the double-declining-balance method.

Depreciation rate = 2 * (100% / useful life) 
Depreciation rate = 2 * (100% / 10) 
Depreciation rate = 20%

For the first year, the depreciation expense would be: 
Depreciation expense = $3,400 * 20% = $680

The book value at the end of the first year would be: 
Book value = $3,400 - $680 = $2,720

For the second year, we apply the same depreciation rate to the remaining book value: 
Depreciation expense = $2,720 * 20% = $544

The accumulated depreciation after the second year would be: 
Accumulated depreciation = $680 + $544 = $1,224

Therefore, the correct answer is (C) $1,224.

Marlow Company Purchased a Point of Sale System on January