Depreciation Question

Question

Can anyone help clarify for me why the residual value of $5,000 (what I assume to be the equivalent of salvage value) is not subtracted from $75,000? This seems to go against everything I though I knew about depreciation. Thank youXYZ Company recently purchased a machine for $75,000. It expects to use the machine for 6 years, after which it will have a residual value of $5,000. How much depreciation should the company charge in the second year using double-declining balance depreciation?$16,667$15,556$25,000Answer: ADepreciation expense (first year) = 2/6 × (75,000) = $25,000Depreciation expense (second year) = 2/6 × (75,000 − 25,000) = $16,667 (Wiley 25-16)Wiley. Practice Questions for 2015 Level I CFA Exam. John Wiley & Sons P&T, 2014-08-27. VitalBook file.

PrestigeWorldWide · Answer

Thanks, I appreciate the clarification

PrestigeWorldWide · Answer

Further in the text, the below question is asked. Am I missing something? Does the double decline balance method not account for an asset's salvage value?Supernova’s depreciation expense for 2009 under the straight line method is closest to:$101,875$109,375$81,500Answer: ADepreciation expense = (Cost – Residual Value) / Useful lifeDepreciation expense = (875,000 – 60,000) / 8 = $101,875 (Wiley 25-26)Wiley. Practice Questions for 2015 Level I CFA Exam. John Wiley & Sons P&T, 2014-08-27. VitalBook file.