Agnes purchased a computer for $2,240.It has an estimated useful life of four years and an estimated residual value of $240.The entry to record the depreciation charge for the first year using the double-declining-balance method is:

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation calculates the depreciation expense as a percentage of the asset's book value at the beginning of the year.

The formula for calculating depreciation using the double-declining-balance method is:

2 x straight-line rate x book value at beginning of year

The straight-line rate is calculated as:

1 / estimated useful life

For this problem, the straight-line rate would be:

1 / 4 = 0.25

The book value at the beginning of the year would be:

Cost - Accumulated Depreciation = $2,240 - $0 = $2,240

So, the depreciation expense for the first year using the double-declining-balance method would be:

2 x 0.25 x $2,240 = $1,120

The accumulated depreciation at the end of the first year would be:

$1,120 + $1,120 = $2,240

The entry to record the depreciation charge for the first year would be:

Depreciation Expense  $1,120
  Accumulated Depreciation - Computer  $1,120

Agnes Purchased a Computer for $2,240