**Depreciation Calculation Using the Double-Declining-Balance Method**A machine with a cost of $55,000 has an estimated residual value of $3,852 and an estimated life of 5 years or 18,749 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?**Options:**a. $22,000 b. $13,200 c. $11,000 d. $20,459 To solve this, you first need to understand how the double-declining-balance method works. This method is a form of accelerated depreciation, meaning more depreciation expense is recognized in the earlier years of an asset’s life.1. **Calculate the straight-line depreciation rate**: - The asset has an estimated life of 5 years, so the straight-line depreciation rate is: \[ \frac{1}{5} = 20\% \]2. **Double the straight-line rate**: - The double-declining rate is: \[ 2 \times 20\% = 40\% \]3. **Apply the rate to the beginning book value each year**: - **Year 1**: \[ \text{Depreciation Expense} = 40\% \times \$55,000 = \$22,000 \] - **Year-End Book Value (End of Year 1)**: \[ \$55,000 - \$22,000 = \$33,000 \] - **Year 2**: \[ \text{Depreciation Expense} = 40\% \times \$33,000 = \$13,200 \]Therefore, the correct answer is **b. $13,200**.

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Description: **Depreciation Calculation Using the Double-Declining-Balance Method**A machine with a cost of $55,000 has an estimated residual value of $3,852 and an estimated life of 5 years or 18,749 hours. What is the amount of depreciation for the second full

A double-declining balance method is an accelerated depreciation method Using this method, the value…

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A machine with a cost of $55,000 has an estimated residual value of $3,852 and an estimated life of 5 years or 18,749 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method? Oa. $22,000 Ob. $13,200 Oc. $11,000 Od. $20,459

A machine with a cost of $55,000 has an estimated residual value of $3,852 and an estimated life of 5 years or 18,749 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method? Oa. $22,000 Ob. $13,200 Oc. $11,000 Od. $20,459

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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