Question

Central Supply purchased a new printer for $67,500. The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $6,750). How much is the first year’s depreciation expense if the company uses the double-declining-balance method?

Answer 1

To calculate the first year's depreciation expense using the double-declining-balance method, double the straight-line depreciation rate and apply it to the printer's initial cost. For the printer worth $67,500, with a 9-year life and $6,750 salvage value, the first year's depreciation is $15,000.

Step-by-step explanation:

The double-declining-balance method of depreciation is an accelerated depreciation method that doubles the book value of an asset's depreciation rate. To calculate the first year's depreciation expense for the printer that Central Supply purchased for $67,500 with a salvage value of $6,750 and a useful life of 9 years, follow these steps:

1. Determine the straight-line depreciation rate by dividing 1 by the useful life of the asset, which is 1/9 or approximately 11.11% per year.
2. Double the straight-line rate to get the double-declining rate, which is 11.11% * 2 = 22.22%.
3. Apply the double-declining rate to the book value of the asset (purchase price - accumulated depreciation). For the first year, the book value is $67,500, as there is no prior depreciation. So, the first year's depreciation expense is 22.22% of $67,500, which equals $15,000.

This means the first year's depreciation expense using the double-declining-balance method for the printer is $15,000.

Answer 2

To calculate the first year's depreciation expense using the double-declining-balance method, double the straight-line depreciation rate and apply it to the printer's initial cost. For the printer worth $67,500, with a 9-year life and $6,750 salvage value, the first year's depreciation is $15,000.

Step-by-step explanation:

The double-declining-balance method of depreciation is an accelerated depreciation method that doubles the book value of an asset's depreciation rate. To calculate the first year's depreciation expense for the printer that Central Supply purchased for $67,500 with a salvage value of $6,750 and a useful life of 9 years, follow these steps:

1. Determine the straight-line depreciation rate by dividing 1 by the useful life of the asset, which is 1/9 or approximately 11.11% per year.
2. Double the straight-line rate to get the double-declining rate, which is 11.11% * 2 = 22.22%.
3. Apply the double-declining rate to the book value of the asset (purchase price - accumulated depreciation). For the first year, the book value is $67,500, as there is no prior depreciation. So, the first year's depreciation expense is 22.22% of $67,500, which equals $15,000.

This means the first year's depreciation expense using the double-declining-balance method for the printer is $15,000.