On January 1, a machine with a useful life of five years and a residual value of $15,000 was purchased for $45,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?
A) $10,800
B) $18,000
C) $14,400
D) $8,640

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation is a method of depreciation that allocates a larger portion of the depreciation expense to the earlier years of an asset's life. The depreciation rate is twice the straight-line depreciation rate.The depreciation expense for year 2 under the double-declining-balance method of depreciation is calculated as follows:Depreciation expense = (2 * Straight-line depreciation rate) * Book value at the beginning of the yearStraight-line depreciation rate = (Cost of asset - Residual value) / Useful life= ($45,000 - $15,000) / 5= $6,000 / 5= 20%Book value at the beginning of year 2 = Cost of asset - Accumulated depreciation at the end of year 1= $45,000 - $10,800= $34,200Depreciation expense = (2 * 20%) * $34,200= 40% * $34,200= $13,680

On January 1, a Machine with a Useful Life of Five