A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or five million units.The equipment is estimated to have a salvage value of $13,400.Assuming the double declining balance method of depreciation,what is the book value at the end of the second year if 1.5 million units were produced?

Question

Quizplus · Accepted Answer

The book value at the end of the second year is $88,977.80. This is calculated by taking the original cost of the equipment ($200,000) and subtracting the accumulated depreciation ($111,022.20). The accumulated depreciation is calculated by multiplying the depreciation rate (33.33%) by the original cost of the equipment and the number of years of depreciation (2).

A Company Purchased Equipment Valued at $200,000 on January 1