A company purchased factory equipment for $740000. It is estimated that the equipment will have a $73000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

the amount of annual depreciation recorded for the second year after purchase will be $177,600

Explanation:

In the double-declining method of depreciation, the rate of depreciation is double of the straight-line rate.

First, we need to calculate the straight-line rate

Straight-line rate = 1 / useful life = 1 / 5 = 20%

Double Declining rate = 20% x 2 = 40%

First year's Depreciation = Book value x Double declining rate

First year's Depreciation = 740,000 x 40% = $296,000

Net Book Value = $740,000 - $296,000 = $444,000

Second Year's depreciation = $444,000 x 40% = $177,600

Net Book Value = $444,000 - $177,600 = $266,400

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total