Depreciation Expense Using the Double-Declining Balance Method The Peete Company purchased an office building for $4,500,000....

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Depreciation Expense Using the Double-Declining Balance Method The Peete Company purchased an office building for $4,500,000....

Depreciation Expense Using the Double-Declining Balance Method
The Peete Company purchased an office building for $4,500,000. The building had an estimated useful life of 25 years and an expected salvage value of $500,000.

Calculate the depreciation expense for the second year using the double-declining balance method. $

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Answer 1

Answer #1

Depreciation Expense - 2nd Year

$ 331,200.00

Working:

Double Declining Balance Method = Book Value * Depreciation Rate

Depreciation Rate = Straight line depreciation rate * 200%

Straight line depreciation rate = 1/25 = 0.04

Depreciation Rate = 0.04*200% = 8%

Cost of Asset	$ 4,500,000.00
Depreciation Expense - 1st Year (4500000*8%)	$ 360,000.00
Book Value	$ 4,140,000.00
*Depreciation Expense - 2nd Year (41400008%)**	$ 331,200.00

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Answer 2

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