Question

The cost of an asset is $1,110,000, and its residual value is $300,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

A) $266,400
B) $324,000
C) $162,000
D) $222,000

Answer 1

$266,400.00

Step-by-step explanation:

Calculating Depreciation using the double depreciation method

Cost of the asset $1,110,000.00

Residual value $ 300,000.00

Useful five year

Depreciation rate = 1/5*100= 20 percent

double depreciation = 40 percent

depreciation year one: = $ 1,110,000.00 x40/100

=$1,110,000.00x0.4

=$444,000.00

Depreciation for year 2: ($ 1,110,000.00- $444,000.00)x 0.4

=$666,000x0.4

=$266,400.00