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
