Question

The cost of an asset is​ $1,020,000, and its residual value is​ $160,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the​ double-declining-balance method of depreciation.​ (Do not round any intermediate​ calculations, and round your final answer to the nearest​ dollar.)

Answer 1

using the DD method the depreciation expense for the second year will be: 244,8‬00

Step-by-step explanation:

`\left[\begin{array}{ccccc}Year&Beginning&Dep-Expense&Acc. \: Dep&Ending\\0&-&-&-&1,020,000\\1&1,020,000&408,000&408,000&612,000\\2&612,000&244,800&652,800&367,200\\3&367,200&146,880&799,680&220,320\\\end{array}\right]`

Double declining rate:

`(1)/(useful \: rate) * 2`

(1/5) x 2 = 2/5 = 40%

first year depreciation expense 1,020,000 x 40% = 408,000

carrying value 1,020,000 - 408,000 = 612,000

second year dep expense 612,000 x 40% = 244,8‬00