Marlow Company purchased a point of sale system on January 1 for $3,400.This system has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?
A)$680.
B)$480.
C)$544.
D)$600.
E)$300.

Question

Quizplus · Accepted Answer

Double-declining-balance method is an accelerated depreciation method where the depreciation expense in early years is higher than in later years. The formula used to calculate the depreciation expense using this method is:

Depreciation Expense = (2 / Useful Life) * Beginning Period Book Value

For the second year, the beginning period book value can be calculated using the formula:

Beginning Period Book Value = Cost of Asset - Accumulated Depreciation

Accumulated depreciation for the first year can be calculated using the formula:

Depreciation Expense Year 1 = (2 / 10) * $3,400 = $680

Accumulated Depreciation Year 1 = $680

Beginning Period Book Value Year 2 = $3,400 - $680 = $2,720

Depreciation Expense Year 2 = (2 / 10) * $2,720 = $544

Therefore, the depreciation expense for the second year of its useful life using the double-declining-balance method is $544, so the best answer choice is C.

Marlow Company Purchased a Point of Sale System on January