Question

The cost of an asset is $1,170,000?, and its residual value is $180,000. Estimated useful life...

The cost of an asset is $1,170,000?, and its residual value is $180,000. Estimated useful life of the asset is eight years. Calculate depreciation for the second year using the double-declining-balance method of depreciation.? (Do not round any intermediate? calculations, and round your final answer to the nearest? dollar.)

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Answer #1

Ans. As per double declining method of depreciation, we calculate depreciation as under

Depreciation = 2*Staight line method percent*Book Value

Lets calculate depreciation for 1st year

Straight line depreciation rate = 100/8 = 12.5%

According to double declining method rate would be = 12.5%*2 = 25%

Book Value = $11,70,000

Depreciation for 1st year = $11,70,000*25% = $292500

Book for 2nd year = $11,70,000 - $2,92,500 = $8,77,500

Depreciation for 2nd year = $8,77,500*25% = $219,375

So the Depreciation for 2nd year = $219,375.

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