A company purchased a POS cash register on January 1 for $5,400.This register has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?
A)$500
B)$800
C)$864
D)$1,000
E)$1,080

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation rate, which is 2 / 10 = 0.2 or 20%.

For the first year, using the double-declining-balance method, the depreciation expense is:

Year 1: (5,400 - 400) x 20% = $960

To calculate the depreciation expense for the second year, we need to subtract the accumulated depreciation from the original cost:

Accumulated depreciation after Year 1: $960

Remaining book value: $5,400 - $960 - $400 = $4,040

Year 2: ($4,040 x 20%) = $808

Therefore, the depreciation expense for the second year using the double-declining-balance method is $808, which is closest to option C ($864).

A Company Purchased a POS Cash Register on January 1