On January 1, 2014, equipment was purchased for $80,000; the equipment's estimated residual value is $15,000, and its estimated useful life is 10 years. For 2014, the depreciation expense under the double-declining balance method is $13,000.

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Quizplus · Accepted Answer

The double-declining balance method calculates depreciation based on a rate that is twice as high as the straight-line method. To calculate the depreciation expense for the first year, we use the following formula: (2 / useful life) x (cost - accumulated depreciation). In this case, the first year's depreciation would be (2 / 10) x ($80,000 - $0) = $16,000. This means that the statement is false, as the depreciation expense for 2014 should be $16,000, not $13,000.

On January 1, 2014, Equipment Was Purchased for $80,000; the Equipment's