Question

Cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method

Answer 1

$800

Step-by-step explanation:

Double-declining-balance method is also known as reducing balance method.

Depreciation Expense = 2 × SLDP × BVSLDP

Where,

SLDP = 100 ÷ Number of Useful Life

= 100 ÷ 10

= 10 %

Year 1

Depreciation Expense = 2×10%×($5,400 - $400)

= $,1000

Year 2

Depreciation Expense = 2×10%×($5,400 - $400- $,1000)

= $800