Question

chager Company purchased a computer system on January 1, 2019, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance depreciation method. What is the accumulated depreciation balance as of December 31, 2020? $9,000. $4,000. $7,920. $8,520.

Answer 1

Accumulated depreciation= $7,920

Step-by-step explanation:

Giving the following information:

Buyng price= $25,000

Salvage value= $3,000

Number of years= 10

To calculate the depreciation expense, we need to use the following formula:

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

2019:

Annual depreciation= [(25,000 - 3,000) / 10]*2

Annual depreciation= $4,400

2020:

Annual depreciation= [(22,000 - 4,400) / 10]*2

Annual depreciation= $3,520

Accumulated depreciation= $7,920