Question

The cost of an asset is 1,100.000 ands its residual value is 140,000 estimated useful life of the asset is eight years. Calculate the depreciation for the second year using double declining balance method of depreciation.
A) $266,400.
B) $324,000.
C) $162,000.
D) $222,000.

Answer 1

Answer:

Year2= $180,000

Explanation:

Giving the following information:

The cost of an asset is 1,100,000 and its residual value is 140,000 estimated useful life of the asset is eight years.

To calculate the depreciation expense for each year, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Year1= [(1,100,000 - 140,000)/8]*2= 240,000

Year2= [(960,000 - 240,000)/8]*2= $180,000