Schager Company purchased a computer system on January 1, 2012, at a cost of $40,000. The estimated useful life is 10 years, and the estimated residual value is $5,000. Assuming the company will use the double-declining-balance method, what is the depreciation expense for the second year?

Question

Quizplus · Accepted Answer

$40,000 x 20% = $8,000 depreciation in the first year.
($40,000 - 8,000) x 20% = $6,400 depreciation in the second year.
Depreciation rate = 2/10 = 20%.

Schager Company Purchased a Computer System on January 1, 2012