Question

a machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. WHat is the amount of depreciation for the second full year, using the double declining balance method?

Answer 1

Answer:

$18,750

Explanation:

The computation of the depreciation expense using the double-declining balance method is shown below:

First, we have to find the depreciation rate which is shown below:

= One ÷ useful life

= 1 ÷ 4

= 25%

Now the rate is double So, 50%

In year 1, the original cost is $75,000, so the depreciation is $37,500 after applying the 50% depreciation rate

And, in year 2, the $75,000 - $37,500 = $37,500

= $37,500 × 50% = $18,750