Schager company purchased a computer system at a cost of $40,000. the estimated useful life is 10 years, and the estimated residual value is $5,000. assuming the company will use the double-declining-balance method, what is the depreciation expense for the second year?

(a) $6,400.
(b) $5,600.
(c) $8,000.
(d) $7,000.

The correct answer is B: $5,600

Explanation:

Giving the following information:

Schager Company purchased a computer system for $40,000. The estimated useful life is 10 years, and the estimated residual value is $5,000.

Double-declining balance method= Netbook value* (2/useful life in years)

Year 1:

Double-declining balance method= (40000-5000)*(2/10)= $7000

Year 2:

Double-declining balance method= (35000-7000)*0.20= $5,600

answer; swot analysis;