Question

Central Supply purchased a new printer for $45,000. The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $4,500). How much is the first year’s depreciation expense if the company uses the double-declining-balance method?

Answer 1

Answer:

$9,900

Explanation:

The double-declining method is an accelerating approach to accounting for depreciation. The method uses twice the rate of the straight-line depreciation method. For central supply, the straight-line depreciation rate will be.

Useful- life 9 years, the rate will 1/9 x 100

=11.11 %

Double declining method = 11 % x 2 = 22%

the Depreciable amount equal to asset cost minus salvage value

=$45,000 -$4500

=$40,500

Depreciation is done up to the salvage value.

The first-year depreciation will be  22% of the book value( the cost price)

=22% of $45,000

=22/100 x $45,000

=$9,900