What would be the depreciation expense using double-declining-balance to compute the expense for year 2 of a machine costing $15,000,when residual value is $5,000,and useful life is 5 years?

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Quizplus · Accepted Answer

The double-declining-balance method accelerates depreciation. First, calculate the straight-line depreciation rate (100% / 5 years = 20%). Double this rate for the double-declining method (20% * 2 = 40%). For year 1, depreciation is 40% of $15,000, which is $6,000, leaving a book value of $9,000. For year 2, apply the 40% rate to the new book value ($9,000), resulting in a depreciation expense of $3,600.

What Would Be the Depreciation Expense Using Double-Declining-Balance to Compute