Schager Company purchased a computer system at a cost of $30,000. The estimated useful life is 6 years, and the estimated residual value is $8,000. Assuming the company will use 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.) $8,167 $6,667 $8,917 $10,000
Answer: $6,667
Working notes for the above answer is as under
We have been provided with the information that,
computer system cost $30,000
| computer system at a cost of $30,000 | 300,000 |
| estimated useful life is | 6 year |
| estimated residual value | 8000 |
| double-declining-balance method is used |
First of all we need to calculate depreciation as per straight line
=Cost- salvage value/ life of the assets
=100/ 6year
=16.67 each year
In the Double declining method rate of depreciation is double then the straight line so here it is
=16.67 x 200%
=33.33
Calculation under double-declining-balance method, is as follow
| Year | Opening Balance |
Depreciation | Closing balance |
| 1 | 30000 | 9999 | 20001 |
| 2 | 20001 | 6666.333 | 13334.667 |
