QUESTION: A company purchased a machine for $100,000 with a useful life of 5 years and a residual value of $20,000. Using the double-declining balance method, what would be the depreciation expense for the second year?

Answer: The depreciation expense for the second year would be $32,000 ((2/5) x ($100,000 - $20,000)).

Here's the tabulated working calculation for the depreciation expense for the second year using the double-declining balance method:



To calculate the depreciation expense for the second year using the double-declining balance method, we use the formula:

Depreciation expense = (Cost - Accumulated depreciation) x 2 / Useful life

In this case, the cost of the machine is $100,000, the residual value is $20,000, and the useful life is 5 years. In the first year, the depreciation expense using the double-declining balance method is ($100,000 - $20,000) x 2 / 5 = $32,000.

At the end of year 1, the accumulated depreciation is $32,000. To calculate the accumulated depreciation at the end of year 2, we double the accumulated depreciation from the end of year 1, which gives us $32,000 x 2 = $64,000.

To calculate the depreciation expense for year 2, we use the same formula and substitute in the appropriate values:

Depreciation expense, year 2 = ($100,000 - $20,000 - $64,000) x 2 / 5

Simplifying the equation, we get:

Depreciation expense, year 2 = $16,000 x 2

Depreciation expense, year 2 = $32,000

Therefore, the depreciation expense for the second year using the double-declining balance method would be $32,000.