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Damm [24]
3 years ago
5

new machine for $60,000. The machine is expected to operate for ten years, after which it will be sold for salvage value (estima

ted to be $2,000). How much is the first and second year’s depreciation expense if the company uses the double-declining-balance method?
Business
1 answer:
Aleksandr [31]3 years ago
3 0

Answer:

The answers are:

  • Year 1 depreciation = $12,000
  • Year 2 depreciation = $9,600

Explanation:

To calculate the depreciation expense using the double declining balance method we can do the following:

For years 1 and 2 we will use double depreciation 20% [= (100% / 10) x 2]

Year 1 depreciation = $60,000 × 20% =$12,000

Book value end of year 1 = $60,000 - $12,000 = $48,000

Year 2 depreciation = $48,000 × 20% =$9,600

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