Question

36. Regina Company purchased a Cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method

Answer 1

Answer:

$864

Explanation:

Double-declining-balance charges a higher depreciation in early years of the asset and lower in the later years using the formula :

Depreciation expense = 2 x SLDP x BVSLDP

Where,

SLDP = 100 ÷ useful life

         = 10 %

and

BVSLDP = Cost (1st year) and Book Value (any other year)

therefore,

Year 1

Depreciation expense = 2 x 10 % x $5,400

                                      = $1,080

Year 2

Depreciation expense = 2 x 10 % x ($5,400 - $1,080)

                                      = $864

thus

The depreciation expense for the second-year of its useful life using the double-declining-balance method is $864.