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Marlow Company purchased a point of sale system on January 1 for $5,800. This system has a useful life of 5 years and a salvage value of $600. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Respuesta :

Answer: $1392

Explanation:

The depreciation rate under straight line is =1/5=0.2

The depreciation rate under double declining is = 0.2 × 2 = 0.4

Depreciation expense for the first year = 0.4 × $5800 = $2320.

At the beginning of year two, net book value = $5800 - $2320 = $3480

Depreciation expense for year two = 0.4 × $3480 = $1392