Answer:
The depreciation expense for the second year will be $108000
Explanation:
The double declining balance method is an accelerated form of depreciation that charges a rate that is double of the straight line depreciation rate. The formula for depreciation under double declining balance method is,
Depreciation expense = 2 * SLDR * BV
Where,
- SLDR is the straight line depreciation rate
- BV is the book value at the start of the period
The straight line depreciation rate = 100% / 5 = 20% or 0.2
<u>Depreciation expense under Double Declining method</u>
First Year = 2 * 0.2 * 450000 = $180000
Carrying value after Year 1 = 450000 - 180000 = $270000
Second Year = 2 * 0.2 * 270000 = $108000
Carrying value after Year 2 = 270000 - 108000 = $162000
Answer:
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