accoutning

[accouting girl]

The cost of an asset is $1,110,000, and its residual value is $300,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

[iNow]

What do you think the answer is? How have you tried to answer this yourself? Where are you stuck?

 

The members here are happy to help, but helping doesn't include doing your homework for you.

[accouting girl]

I dont know where to start if someone could point me in the right direction i coudl finish it

[iNow]

What's the formula for depreciation using the double-declining-balance method?

[DrmDoc]

The cost of an asset is $1,110,000, and its residual value is $300,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

 

It's a very simple formula to follow, begin by calculating depreciation using the Straight-Line method, which involves dividing the book value of the asset ($1,110,000) by the asset's useful life (5 years). Multiply the result of your calculation by 2 to get the double-declining amount of depreciation for the first year. Now subtract that amount from the book value of the asset to get the net book value, which you will use for the following year's depreciation calculations and so on. Repeat this division by 5, multiply by 2 and subtraction process until you reach the final fifth year where the calculated depreciation amount should reduce the asset's book value to its residual or salvage value ($300,000). I hope this helps.

Edited July 16, 2016 by DrmDoc