Meek Corporation acquires a building at $32,000 for an estimated useful life of 20 years. Meek...

Meek Corporation acquires a building at $32,000 for an estimated useful life of 20 years. Meek estimates the building will have $12,000 residual value at the end of 20 years. Meek uses double declining balance method for depreciation. What's the depreciation expense at the end of second year? *

$1,680

$3,000

$2,880

$1,500

Solutions

Expert Solution

Correct Option C i.e. $2,880



Calculation of depreciation by double declining balance method
Annual Depreciation by SLM = (32000 - 12000)/ 20
=1000
SLM Depretiation Rate = 1000/(32000 - 12000)*100
=5%

Depreciation rate for Double Declining balance method = 5%*2 i.e. 10%
Year	Opening Carrying Value	Depreciation Expense	Accumulated Depreciation	Carrying Value
Year 0				32000
Year 1	32000	3200	3200	28800
Year 2	28800	2880	6080	25920

ekkarill92 answered 1 year ago

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