A company purchased factory equipment for $250,000. It is estimated that the equipment will have a $25,000 salvage value at the

Question

4 years ago

5

A company purchased factory equipment for $250,000. It is estimated that the equipment will have a $25,000 salvage value at the

end of its estimated five year useful life. If the company uses the double-declining balance method of deprecation, the amount of annual depreciation recorded for the second year after purchase would be
a. $100,000b. $60,000c. $90,000d. $43,000

Business

1 answer:

laila [671] · Answer 1 · 2022-01-07T21:58:04+03:00

Answer:

b. $60,000

Explanation:

Double declining method is double the straight line depreciation rate.

Normal straight line depreciation = 1 / useful life = 1/5 = 20%

Double declining rate = 20 * 2 = 40%

Depreciation for 1st year = 250,000 * 0.40 = $100,000

Depreciation for 2nd year = (250,000 - 100,000) * 0.40 = $60,000

Hope that helps.