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On the first day of its fiscal year, Scooter Co. purchased a computer system for a total cost of $50,000. The computer system is expected to have a useful life of 5 years with a residual value of $5,000. If the company uses the double-declining-balance method, its depreciation expense for the computer system in the first year will be:

Respuesta :

Answer:

$20000

Explanation:

Given: Total cost of computer system= $50000.

           Residual value= $5000.

           Useful life= 5 years.

Now, calculating depreciation expense as per double-declining balance method.

[tex]Depreciation\ expense= (cost- Accumlated\ depreciation)\times \frac{2}{useful\ life}[/tex]

⇒ [tex]Depreciation\ expense= (\$ 50000- \$0)\times \frac{2}{5}[/tex]

⇒ [tex]Depreciation\ expense= \$ 50000\times \frac{2}{5}[/tex]

∴ [tex]Depreciation\ expense= \$ 20000[/tex]

Hence, $20000 is the depreciation expense for first year as per double-declining balance method.