The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Question

Quizplus · Accepted Answer

Using the declining-balance method at twice the straight-line rate, the depreciation rate would be 40% (2 x 1/4), which means the depreciation expense for the second year would be $32,000 (40% x [$100,000 - $0]). However, since the residual value cannot be depreciated, we subtract it from the asset's cost to get the depreciable base: $95,000.

So, the depreciation expense for the second year would be $25,600 (40% x $95,000). Therefore, the statement is false, since the depreciation expense is not $25,000.

The Amount of the Depreciation Expense for the Second Full