Question

A company purchased a computer system at a cost of $34,000. The estimated useful life is 7 years, and the estimated residual value is $2,000. Assuming the company uses the double-declining-balance method, what is the depreciation expense for the second year

Answer 1

Answer:

$7,000

Explanation:

Calculation for the depreciation expense for the second year

Depreciation rate will be:

2/7 = 29%

$34,000 × 29% = $9,860

The depreciation in the first year will be $9,860

Thus,

($34,000 - $9,860) × 29%

$24,140×29%

= $7,000

Therefore the depreciation expense for the second year will be $7,000