The cost of an asset is $1,000,000 and its residual value is $100,000.Estimated useful life of the asset is four years.Calculate depreciation for the first year using the double-declining-balance method of depreciation.

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/4 (25%) for a 4-year life. Double that rate is 50%. First-year depreciation is 50% of $1,000,000, which is $500,000.

The Cost of an Asset Is $1,000,000 and Its Residual