Exhibit 11-1
On January 1, Year 1, Hills purchased equipment for $350,000. The equipment had an estimated useful life of ten years and an estimated residual value of $50,000. Use the double-declining-balance method to answer the following questions).
-Refer to Exhibit 11-1. How much depreciation should Hills record on the asset in year 1?

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line rate of depreciation. The straight-line rate for an asset with a 10-year life is 10%. Doubling this gives a rate of 20%. Applying this rate to the asset's beginning book value of $350,000 results in $70,000 of depreciation for the first year.

Exhibit 11-1 On January 1, Year 1, Hills Purchased Equipment for $350,000