Slovac Company purchased a machine that has an estimated useful life of eight years for $7,500. Its salvage value is estimated at $500.
What is the depreciation expense for the second year, assuming Slovac uses the double-declining balance method of depreciation?
A) $1,438.
B) $1,875.
C) $1,406.
Your answer: C was correct!
double-declining balance depreciation rate = 2 × 1/8 = ¼ or 25%
first year deprecation will be $7,500 × 0.25 = $1,875
second year deprecation will be ($7,500 − $1,875) × 0.25 = $1,406
What is the depreciation expense for the second year, assuming Slovac uses the double-declining balance method of depreciation?
A) $1,438.
B) $1,875.
C) $1,406.
Your answer: C was correct!
double-declining balance depreciation rate = 2 × 1/8 = ¼ or 25%
first year deprecation will be $7,500 × 0.25 = $1,875
second year deprecation will be ($7,500 − $1,875) × 0.25 = $1,406