On January 1,a machine with a useful life of five years and a residual value of $6,000 is purchased for $30,000.What is the depreciation expense in year 2 using the double-declining-balance method?
A) $7,200
B) $9,600
C) $8,160
D) $12,000

Question

Quizplus · Accepted Answer

The double-declining-balance method depreciates an asset at twice the straight-line rate. The straight-line rate is calculated by dividing the depreciable cost (cost - residual value) by the useful life. In this case, the depreciable cost is $30,000 - $6,000 = $24,000 and the useful life is 5 years. Therefore, the straight-line rate is $24,000 / 5 = $4,800. The double-declining-balance rate is twice the straight-line rate, or $4,800 * 2 = $9,600. The depreciation expense in year 2 is the double-declining-balance rate multiplied by the book value of the asset at the beginning of the year. The book value of the asset at the beginning of year 2 is $30,000 - $9,600 = $20,400. Therefore, the depreciation expense in year 2 is $9,600 * $20,400 = $7,200.

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