Question

A company purchased factory equipment for $350,000 at the beginning of the year. 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 Group of answer choices $140,000. $84,000. $126,000. $60,480.

Answer 1

Answer: b- $84,000

Step-by-step explanation:

Using the Double Decline balance method:

Annual Depreciation Rate = 1/useful Life x 2 = 1/5x2 = 0.4 = 40%

Depreciation for First year

$350,000 X 0.4 = $140,000

Book value after year 1: $350,000 - $140,000 = $210,000

Depreciation for Second year

$210,000 X 0.4 = $84,000