What is the depreciation expense for the first year using the double-declining-balance method?
A) $52,800
B) $57,600
C) $53,000
D) $55,200

Question

Quizplus · Accepted Answer

Using the double-declining-balance method, the depreciation rate is twice the straight-line rate, which is 20% (100% divided by 5 years). Therefore, the depreciation rate is 40% (20% x 2). The first-year depreciation expense is calculated as follows:
Cost of asset = $240,000
Depreciation rate = 40%
First-year depreciation expense = Cost of asset x Depreciation rate = $240,000 x 40% = $96,000
However, the double-declining-balance method has a book value limitation, which means that the depreciation expense for the last year is adjusted so that the total depreciation expense adds up to the cost of the asset. In this case, the book value at the beginning of year 3 would be $57,600 ($96,000 x 60%). This means that the depreciation expense for year 3 would be $39,600 ($57,600 - $18,000). Therefore, the total depreciation expense for the first year would be $57,600 ($96,000 - $39,600).

What Is the Depreciation Expense for the First Year Using