Question

An asset has a cost of $60,000 with a residual value of $10,000. It has a life of 5 years and was purchased on January 1. Its fourth full year of depreciation expense under double-declining - balance will be: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) O A. $8,640 OB. $0. O C. $5,184 OD. $2,960.

Answer 1

Solution 1:

Double declining rate = (1/5) ×2 = 40%

E G Н 5 Depreciation Schedule Double Declining Balance Method 6 7 Depreciation for the Period End of Period Beginning of period Year Annual Accumulated Depreciation Rate 8 Book Value book value Depreciation $24,000 $14,400 $8,640 $2,960 Depreciation $60,000 $36,000 $21,600 $12,960 36,000.00 40% 24,000.00 38,400.00 47,040.00 50,000.00 40% 10 2 21,600.00 40% 12,960.00 10,000.00 11 3 12 Balance 4 13 $50,000 14 Total 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 ле Sheet417 (2) Sheet35 (13) Sheet962 Sheet980 et956

Fourth year depreciation = $2,960

Hence, option "D" is correct.

Solution 2:

Annual depreciation = (cost - salvage value)/ useful life = (45000 - 8000) / 5 = $7,400

Year 1 Depreciation (for 10 months, from March to December) = $7400*10/12 = $6,166

Hence, option "D" is correct.