Answer:
Annual depreciation 2020= $3,520
Explanation:
Giving the following information:
Purchase price= $25,000
Useful life= 10 years
Salvage value= $3,000
To calculate the annual depreciation for 2020 under the double-declining balance, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
2019:
Annual depreciation= 2*[(25,000 - 3,000) / 10]
Annual depreciation= $4,400
2020:
Annual depreciation= 2*[(22,000 - 4,400) / 10]
Annual depreciation= $3,520
The depreciation expense of Schager Company for 2020 is C. $4,000.
The depreciation expense under the double-declining-balance method can be determined by dividing 100% by the estimated useful life and multiplying it by 2.
The rate obtained is then used to depreciate the asset annually based on the declined balance.
Cost of computer system = $25,000
Estimated useful life = 10 years
Estimated residual value = $3,000
Method of depreciation = double declining-balance method
Depreciation expense rate = 20% (100/10 x 2)
Depreciation expense for 2019 = $5,000 ($25,000 x 20%)
Declined balance at January 1, 2020 = $20,000 ($25,000 - $5,000)
Depreciation expense for 2020 = $4,000 ($20,000 x 20%)
Thus, the depreciation expense of Schager Company for 2020 is C. $4,000.
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