Assume the cost of computer equipment was $11,000, the estimated residual value is $1,000, and the estimated useful life is five years. The company uses a declining balance method to depreciate the asset over its useful life at a rate of 40%. Calculate the depreciation expense of the company over the 5 years.

To calculate the depreciation expense using the declining balance method, we need to follow these steps:

Step 1: Determine the depreciable cost of the computer equipment. This is the cost of the asset minus its estimated residual value. In this case, the depreciable cost is $11,000 -$1,000 = $10,000.

Step 2: Calculate the depreciation rate. The declining balance method uses a fixed percentage rate to calculate depreciation. In this case, the rate is 40% or 0.40.

Step 3: Calculate the depreciation expense for each year. To do this, multiply the depreciable cost by the depreciation rate. In the first year, the depreciation expense is $10,000 * 0.40 =$4,000.

Step 4: Calculate the remaining book value of the asset after each year. Subtract the depreciation expense from the previous year's book value. In the first year, the book value is $11,000 -$4,000 = $7,000.

Step 5: Repeat steps 3 and 4 for each subsequent year. In the second year, the depreciation expense is $7,000 * 0.40 =$2,800, and the book value is $7,000 -$2,800 = $4,200. In the third year, the depreciation expense is$4,200 * 0.40 = $1,680, and the book value is$4,200 - $1,680 =$2,520. Continue this process for the remaining years.

Step 6: Sum up the depreciation expenses for all five years to find the total depreciation expense over the useful life of the asset. In this case, the total depreciation expense is $4,000 +$2,800 + $1,680 +$1,008 + $604.80 =$10,092.80.

Therefore, the depreciation expense of the company over the 5 years is $10,092.80.