Question

Mohr company purchases a machine at the beginning of the year at a cost of $47,000. the machine is depreciated using the double declining balance method. the machine's useful is life estimate by 5 years with 7,000 salvage value. depreciation expense in years 2 is

Answer 1

Answer)

Calculation of depreciation under double declining balance method:

Depreciation for Year 1:

= Original cost of the asset x rate of depreciation

= $ 47,000 x 40%

= $ 18,800

Depreciation for Year 2:

= (Original cost - depreciation for year 1) x rate of depreciation

= ($ 47,000 - $18,800) x 40%

= $ 11,280

Therefore depreciation expense for year 2 is $ 11,280

Working note:

Rate of depreciation under double declining balance method = (1/ number of years of useful life of the asset) x 2

= (1/5 years) x 2

= 40%