Question

A machine with a cost of $58,900 has an estimated residual value of $3,688 and an estimated life of 5 years or 15,922 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

Answer 1

Depreciation using Double Declining Balance Method

Double Declining Balance Depreciation = Book Value Beginning x 2 x Straight line depreciation Rate

Straight Line Depreciation Rate = [1 / Useful life] x 100

= [1 / 5] x 100

= 20%

Depreciation Expenses for the first year = $23,560 [$58,900 x 2 x 0.20]

Depreciation Expenses for the second year = $14,136 [($58,900 – 23,560) x 2 x 0.20]

“Therefore, The amount of depreciation for the second full year, using the double-declining-balance method = $14,136”