Asked by Justin Shaughnessy on May 08, 2024
Verified
What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?
A) $680.
B) $480.
C) $544.
D) $600.
E) $300.
Double-declining-balance
A method of accelerated depreciation calculating a larger depreciation charge in the first year of an asset's life and progressively smaller charges in subsequent years.
Depreciation Expense
The portion of the cost of a fixed asset that is charged as an expense in a particular accounting period, reflecting the asset's usage and wear and tear.
- Comprehend the theories and practical applications of assorted depreciation techniques.
Verified Answer
Depreciation rate = 1/10 x 2 = 0.2 or 20%
Book value at the beginning of the period 2 = Cost - Depreciation Expense for Year 1 = $3,400 - ($3,400 x 0.2) = $2,720
Depreciation Expense for Year 2 = Book value at the beginning of the period 2 x Depreciation rate = $2,720 x 0.2 = $544.
Therefore, the correct answer is C) $544.
Learning Objectives
- Comprehend the theories and practical applications of assorted depreciation techniques.
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