An asset is purchased for $50,000. It has an estimated useful life of eight years and salvage value of $6,000.if the asset is depreciated using the double-declining balance method,what are the depreciation expense and book value at the end of year two?

The depreciation method to be used is explained here:

http://beginnersinvest.about.com/cs/investinglessons/l/bldbldeclinebal.htm

Using straight-line depreciation, the depreciation percentage each year would be 1/8 or 12.5%. With the double-declining-balance method (ddbm), it is 25% per year until the annual depreciation allowance is less than it would be with the straight-line method. The first-year depreciation allowance withthe d.d.b.m. is $11,000, and the book value at the end of that year is $39,000. For the second year, the depreciation allowance is (1/4)(39,000-6000) = 8250, and the book value at the end of that year is 39,000 - 8250 = 30,750. If straight-line depreciation had been used, the depreciation allowance each year would be 44,000*(1/8) = 5500. Since that is less than the double-declining balance value, the double declining balance method can be used for the second year.

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To calculate the depreciation expense and book value at the end of year two using the double-declining balance method, you first need to understand the concept of this method.

The double-declining balance method is an accelerated depreciation method that allows for higher depreciation expenses during the earlier years of an asset's useful life. It assumes that an asset depreciates faster in the early years and slows down over time.

Here's how you can calculate the depreciation expense and book value at the end of year two:

Step 1: Determine the straight-line depreciation rate.
The straight-line depreciation rate can be calculated by dividing 1 by the estimated useful life in years. In this case, the straight-line depreciation rate would be 1/8 (1 divided by 8), which equals 0.125 or 12.5%.

Step 2: Calculate the double-declining depreciation rate.
The double-declining depreciation rate is twice the straight-line depreciation rate. Therefore, the double-declining depreciation rate would be 2 * 0.125 = 0.25 or 25%.

Step 3: Calculate the depreciation expense for year one.
To calculate the depreciation expense for year one, multiply the double-declining depreciation rate by the cost of the asset. In this case, it would be 0.25 * $50,000 = $12,500.

Step 4: Calculate the book value at the end of year one.
To calculate the book value at the end of year one, subtract the depreciation expense for year one from the cost of the asset. In this case, it would be $50,000 - $12,500 = $37,500.

Step 5: Calculate the depreciation expense for year two.
To calculate the depreciation expense for year two, multiply the double-declining depreciation rate by the book value at the end of year one. In this case, it would be 0.25 * $37,500 = $9,375.

Step 6: Calculate the book value at the end of year two.
To calculate the book value at the end of year two, subtract the depreciation expense for year two from the book value at the end of year one. In this case, it would be $37,500 - $9,375 = $28,125.

Therefore, the depreciation expense at the end of year two is $9,375, and the book value at the end of year two is $28,125.