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on january 1, year 1, miller company purchased equipment for $36,000. residual value at the end of an estimated six-year service life is expected to be $8,000. the company uses the double-declining balance method. for how much would each item below be reported at the end of year 2?

Respuesta :

The item that would be reported at the end of year 2 after depreciation will be at $8,000

Finding the rate of depreciation -

= Year one/The useful life of the equipment

= 1/6

= 0.166

As per the double declining method -

The rate is double = 0.333%

In year 1,

Original cost is $36,000, so the depreciation is $12,000 after applying the 33.33% depreciation rate

In year 2 -

(36,000 - 12,000) × 33.33%

= 24,000 × 33.33%

= 7999.2 or

= 8,000

The depreciation expense is $8,000

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