Schager Company purchased a computer system on January 1, 2014, at a cash cost o

Question

Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,600. The estimated useful life is 10 years, and the estimated residual value is $3,300. The company will use the double declining-balance depreciation method. How much is the 2015 depreciation expense?

A. $4,460.

B. $3,568.

C. $5,120.

D. $4,096.

Please provide as much math and/or detailed explanation as possible.

Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,600. The estimated useful life is 10 years, and the estimated residual value is $3,300. The company will use the double declining-balance depreciation method. How much is the 2015 depreciation expense?

Explanation / Answer

Solution-

D. $4,096

Calculation-

2014 depreciation expense = $25,600*2/10

2014 depreciation expense = $5,120

2015 depreciation expense = ($25,600 - $5,120)*2/10

2015 depreciation expense = $4,096

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