Question

Maertge airlines purchases an aircraft for $84,000,000 on january 1, 2016. the residual value of the aircraft is estimated at $7,500,000, and its useful life is estimated at 25 years. applying the double-declining-balance method of depreciation, the depreciation expense recognized for the year ended december 31, 2018 will be __________.​

Answer 1

The working equation for double declining method is:

Depreciation = (Cost - Accumulated Depreciation)×2/Useful life

So, the solution would be:

Year 2016
Depreciation = ($84,000,000  - 0)×2/25 = $6,720,000
Year 2017
Depreciation = ($84,000,000  - $6,720,000)×2/25 = $6,182,400
Year 2018
Depreciation = ($84,000,000  - $6,182,400)×2/25 = $6,225,408