Question

Schager Company purchased a computer system on January 1, 2014, at a cash cost of $23,000. The estimated useful life is 10 years, and the estimated residual value is $2,800. The company will use the double declining-balance depreciation method. What is the accumulated depreciation balance as of December 31, 2015

Answer 1

Accumulated depreciation= $7,272

Step-by-step explanation:

Giving the following information:

Purchased: January 1, 2014, at a cash cost of $23,000.

The estimated useful life is 10 years.

The estimated residual value is $2,800.

Under the double-declining balance, we need to use the following formula for each year:

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

2014= [(23,000 - 2,800)/10]*2= 4,040

2015= [(20,200 - 4,040)/10]*2= 3,232

Accumulated depreciation= $7,272