An equipment was purchased for $30,000.It has a useful life of 5 years, and a residual value of $4,000.Compute the depreciation expense for the second year using the double-declining-balance method.
A) $5,200
B) $6,000
C) $6,240
D) $7,200

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so double is 40%. First-year depreciation: $30,000 * 40% = $12,000. Second-year depreciation: ($30,000 - $12,000) * 40% = $7,200.

An Equipment Was Purchased for $30,000