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.What is the amount by which double-declining-balance depreciation would exceed straight-line depreciation over the five-year life of the equipment?

Question

Quizplus · Accepted Answer

The total depreciation expense over the life of the asset will be the same under both the double-declining-balance method and the straight-line method, as both will depreciate the asset from its cost down to its residual value.