Using the declining-balance method (twice the straight-line method), what is the amount of depreciation for the second year of use for a $9,000 dental prophy machine, with an estimated residual value of $300 and an estimated life of three years?
Explanation
Answer: D- Using the declining-balance method (twice the straight-line method), depreciation of a $9,000 dental prophy machine, with an estimated residual value of $300 and an estimated life of three years is $2,000. You must first compute the depreciation for the first year ($6000) by multiplying the cost of the machine by 2/3 (straight-line rate of 1/3 multiplied by 2), so $9000 x 2/3 = $6,000. The second year is calculated by multiply the book value of $3,000 ($9000 minus the first year depreciation of $6000) by 2/3. $3,000 x 2/3 = $2,000.
