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Opine Company uses the double-declining-balance method of depreciation. It purchases a building with a cost of...

Opine Company uses the double-declining-balance method of depreciation. It purchases a building with a cost of $560,000, a salvage value of $32,000 and a useful life of 16 years. What is the depreciation expense for the second year? A. $61,250 B. $60,000 C. $57,750 D. $70,000 E. $66,000

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Answer #1

Answer: A. $61,250

Explanation

Double Declining Balance Depreciation
Beginning book value x Double the straight- = Depreciation expense
line rate
Year 1 $            560,000.00 x 12.50% = $               70,000.00
Year 2 $            490,000.00 x 12.50% = $               61,250.00
Explanation:
Double-declining-balance rate = (100% / 16 years) × 2 = 12.50% per year
Book value at beginning of year 2 = $560,000 - $70,000 = $490,000
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