Schager Company purchased a computer system on January 1, 2014, at a cash cost of $23,000. The estimated useful life is 10 years, and the estimated residual value is $2,800. The company will use the double declining-balance depreciation method. What is the accumulated depreciation balance as of December 31, 2015

Accumulated depreciation = $7,272

Explanation:

Giving the following information:

Purchased: January 1, 2014, at a cash cost of $23,000.

The estimated useful life is 10 years.

The estimated residual value is $2,800.

Under the double-declining balance, we need to use the following formula for each year:

Annual depreciation = 2*[ (book value) / estimated life (years) ]

2014 = [ (23,000 - 2,800) / 10]*2 = 4,040

2015 = [ (20,200 - 4,040) / 10]*2 = 3,232

Accumulated depreciation = $7,272