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A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of four years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

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Answer:

Annual depreciation= $300

Explanation:

Giving the following information:

Purchasing price= $1,450

Salvage value= $250

Useful life= 4 years

First, we need to determine the annual depreciation for the whole year using the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Annual depreciation= 2*[(1,450 - 250) / 4]

Annual depreciation= $600

Now, for 6 months:

Annual depreciation= (600/12)*6= $300

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