Question

A building is acquired on January 1, at a cost of $970,000 with an estimated useful life of 8 years and salvage value of $87,300. Compute depreciation expense for the first three years using the double-declining-balance method. (Round your answers to the nearest dollar.)

Answer 1

Answer:

Double declining method:

Depreciation rate = (1/ estimated useful life) × 2

= (1/8) ×2

=0.25 or 25%

	Depreciation for the period			End of period
Annual period	Beginning of period book value	Depreciation rate (%)	Depreciation expenses	Accumulated depreciation	Book value
First year	$970,000	25%	$242,500	$242,500	$727,500
Second year	$727,500	25%	$181,875	$424,375	$545,625
Third year	$545,625	25%	$136,406	$506,781	$409,219