Question

A company purchased a computer system at a cost of $27,000. The estimated useful life is 6 years, and the estimated residual value is $8,000. Assuming the company uses the double-declining-balance method, what is the depreciation expense for the second year? (Do not round your intermediate calculations. Round your answer to the nearest whole dollar amount.) a) $8,250 b) $6.000 c) $9,000. d) $7.500

Answer 1

$6,000

Step-by-step explanation:

The calculation of depreciation expense for the second year 5s sh6wn below:-

Depreciation rate as per straight line method=100% ÷ 6

= 16.67% per year

Depreciation as per double decline balance = 2 × Depreciation rate as per straight line method × Beginning value of each period

Year Beginning value Depreciation Ending value

1 $27,000 $9,000 $18,000

(2 × 16.67% × $27,000) ($27,000 - $9,000)

2 $18,000 $6,000

(2 × 16.67% × $27,000)