Gump Shrimp Company
On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method.
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Refer to the information provided for Gump Shrimp Company. What would be the book value of the ship after ten years?
A) $200,000
B) $400,000
C) $ 0
D) $100,000

Question

Gump Shrimp Company 
On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method.
-
Refer to the information provided for Gump Shrimp Company. What would be the book value of the ship after ten years?
A) $200,000
B) $400,000
C) $ 0
D) $100,000

Quizplus · Accepted Answer

The double-declining-balance method will depreciate the asset to its salvage value, which is $100,000, after ten years.