Eastern Fisheries Co. purchased equipment on January 1, 20X1 for $22,500. The equipment had an estimated useful life of 10 years and an estimated residual value of $2,500. The company uses double-declining-balance depreciation.

-Assuming Eastern uses double-declining-balance depreciation, what would be the depreciation expense for 20X1?

Question

-Assuming Eastern uses double-declining-balance depreciation, what would be the depreciation expense for 20X1?

Quizplus · Accepted Answer

The double-declining-balance depreciation rate is 2 divided by the useful life, which is 2/10 or 20%. The depreciation expense for the first year is calculated on the initial cost of $22,500. Thus, $22,500 * 20% = $4,500.