Falling Leaves Lawn Care
This company purchased new excavating equipment at the beginning of Year 1. The equipment has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in Year 1. The equipment was used 20,000 hours during Year 1 and 24,000 hours during Year 2. The number of expected hours over five years is 100,000.
-Refer to the figure Falling Leaves Lawn Care.How would double-declining-balance depreciation exceed straight-line depreciation over the five-year life of the equipment?

Question

Quizplus · Accepted Answer

Double-declining-balance depreciation and straight-line depreciation will ultimately depreciate the asset to the same total amount over the asset's life. The difference lies in the timing and pattern of depreciation, not in the total amount depreciated.