Answer:
$61,824
Explanation:
We know,
Depreciation expense rate under the double-declining method = (100% ÷ useful life) × 2
Depreciation expense rate = (100% ÷ 25) × 2 = 8%
The first year depreciation expense that was recorded properly = $840,000 × 8% = $67,200.
In the double-declining method, we have to use the book value of a tangible assets to find the subsequent years' depreciation expense. The book value of a tangible assets can be calculated as follows: Book value = Purchase value - Accumulated depreciation.
Therefore, book value of the building after 1st year depreciation expense = $840,000 - $67,200 = $772,800.
Hence, the 2nd year depreciation expense = $772,800 × 8% = $61,824.
