Final answer:
The first-year depreciation expense for Goliath National Bank's building using the double-declining-balance method is $207,500, calculated by doubling the straight-line rate of 12.5% and applying it to the initial cost of $830,000.
Step-by-step explanation:
The student's question about calculating the first-year depreciation expense using the double-declining-balance method pertains to the acquisition of a building by Goliath National Bank for $830,000, with a useful life of 8 years and a salvage value of $75,000. To compute the depreciation expense using the double-declining balance method, you first need to determine the straight-line depreciation rate, which is 1 divided by the useful life of the asset. For an 8-year life, this is 1/8 or 12.5%. Then, double this rate to get 25% for the double-declining balance method.
Next, apply this double rate to the book value of the asset at the beginning of the year. In the first year, the book value is the initial cost of the building, which is $830,000. Therefore, the first-year depreciation expense is 25% of $830,000, which equals $207,500. However, we must ensure that the book value does not drop below the salvage value at the end of its useful life. Since it's only the first year, this is not a concern yet.