Question

A company purchased a computer system at a cost of $25,000. The estimated useful life is 7 years, and the estimated residual value is $2,000. Assuming the company uses 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.) Multiple Choice O $7352 0 $5,102 0 O 56,602 0

Answer 1

Correct answer--------$5,102

Working

Double declining Method
	Cost	$ 25,000
B	Residual Value	$ 2,000
C=A - B	Depreciable base	$ 23,000
D	Life [in years]	7
E=C/D	Annual SLM depreciation	$ 3,286
F=E/C	SLM Rate	14.29%
G=F x 2	DDB Rate	28.57%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 25,000	28.57%	$ 7,143	$ 7,143	$ 17,857
2	$ 17,857	28.57%	$ 5,102	$ 12,245	$ 12,755