Answer:
$12,062.79
Explanation:
The double-declining-balance method is an accelerated depreciation method that records larger depreciation expenses during the earlier years of an asset's useful life, and smaller ones in later years.
To calculate the depreciation for the second full year, i need to know the following:
- The asset's cost: $64,900
- The asset's estimated residual value: $3,156
- The asset's estimated life: 5 years or 16,146 hours
First, i need to calculate the asset's straight-line depreciation rate. This is done by dividing the depreciable cost (cost minus residual value) by the asset's estimated life. The depreciable cost is $61,744 ($64,900 - $3,156). The straight-line depreciation rate is therefore 12.349% ($61,744 / 5 years).
Next, i need to calculate the double-declining-balance depreciation rate. This is done by multiplying the straight-line depreciation rate by 2. The double-declining-balance depreciation rate is therefore 24.698% (12.349% x 2).
To calculate the depreciation for the second full year, i need to apply the double-declining-balance depreciation rate to the asset's beginning-of-year book value for the second year. The beginning-of-year book value for the second year is the asset's cost minus the accumulated depreciation for the first year. The accumulated depreciation for the first year is calculated as follows:
- First-year depreciation = Beginning book value x Double-declining-balance depreciation rate
- Beginning book value = Asset's cost
- Accumulated depreciation for the first year = First-year depreciation
First-year depreciation = $64,900 x 24.698% = $16,031.21
Accumulated depreciation for the first year = $16,031.21
The beginning-of-year book value for the second year is therefore $48,868.79 ($64,900 - $16,031.21).
The depreciation for the second full year is calculated as follows:
- Second-year depreciation = Beginning book value x Double-declining-balance depreciation rate
- Beginning book value = $48,868.79
- Second-year depreciation = $48,868.79 x 24.698% = $12,062.79
Therefore, the amount of depreciation for the second full year, using the double-declining-balance method, is $12,062.79.