Answer :
Answer:
Results are below.
Explanation:
Giving the following information:
Purchase price= $45,000
Useful life= 5 years
Salvage value= $10,000
To calculate the annual depreciation under the double-declining balance method, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
2018:
Annual depreciation= 2[(45,000 - 10,000) / 5]
Annual depreciation= 14,000
2019:
Annual depreciation= 2*[(35,000 - 14,000)/5]
Annual depreciation= $8,400
The depreciation expense using the double-declining-balance method in 2018 is $18,000 and in 2019 is $10,800.
The double-declining balance method is an accelerated depreciation method when compared with other deprecation methods.
Depreciation expense = (2 x cost of the asset) / useful life of the asset
Deprecation expense in 2018
(2 x $45,000) / 5 = $18,000
Deprecation expense in 2019
Book value in 2019 = cost of the asset - deprecation expense
$45,000 - $18,000 = $27,000
Deprecation expense = (2 x $27,000) / 5 = $10,800
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