On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method.
-What was the depreciation expense for Grove City Corp.for the year ended December 31,2017?

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/10 = 10%. Double that is 20%. Depreciation for 2017 is 20% of $2,000,000, which is $400,000.