Answer:
Depreciation for year 2 = $18,667
Explanation:
Double declining depreciation rate = Depreciation rate as per straight line method [tex]\times[/tex] 2
Straight line method depreciation = [tex]\frac{Cost\ of\ asset\ -\ Salvage\ value}{life\ in\ years}[/tex]
= [tex]\frac{75,000 - 5,000}{4} = 17,500[/tex]
Depreciation rate = 17,500/75,000 = 23.33%
Double declining depreciation rate = 23.33 [tex]\times[/tex] 2 = 46.67%
Thus, depreciation in year 2 as per double declining method =
Value at end of year 1 = $75,000 - 46.66667% = $40,000
Depreciation for year 2 = $40,000 [tex]\times[/tex] 46.66667% = $18,667
