Question

Marlow Company purchased a point of sale system on January 1 for $6,300. This system has a useful life of 10 years and a salvage value of $850. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method

Answer 1

Depreciation expense Year 2= $872

Step-by-step explanation:

Giving the following information:

Purchase price= $6,300

Salvage value= $850

Useful life= 10

To calculate the depreciation expense under the double-declining balance method, we need to use the following formula each year:

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

Year1= 2*[(6,300 - 850)/10]= $1,090

Year2= 2*[(5,450 - 1,090)/10]= $872