Fantasy Cruise Lines On January 1,2012,the company purchased a ship for $1,000,000.It has a ten-year useful life and a residual value of $100,000.The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines.Compute the amount of depreciation expense for the year ended December 31,2012.

Question

Quizplus · Accepted Answer

The double-declining-balance method involves doubling the straight-line depreciation rate. The straight-line rate is 1/10 = 10%, so double is 20%. Depreciation for 2012 is 20% of $1,000,000, which is $200,000.

Fantasy Cruise Lines on January 1,2012,the Company Purchased a Ship