Question

A company purchased factory equipment for $350,000. It is estimated that the equipment will have a $35,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be:_________ a. $140,000 b. $84,000. c. $126,000 d. $75,600

Answer 1

Annual depreciation= $126,000

Step-by-step explanation:

Giving the following information:

Purchase price= $350,000

Useful life= 5 years

Salvage value= $35,000

To calculate the annual depreciation under the double-declining balance, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Annual depreciation= 2*[(350,000 - 35,000) / 5]

Annual depreciation= $126,000