Gary Kraen Company purchased equipment on May 1, 2017 for $100,000. The residual value is $25,000 and the estimated useful life is 10 years. What is the Depreciation Expense for the year ending December 31, 2018, if the company uses the double-declining-balance method? (Round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The double-declining-balance method involves doubling the straight-line depreciation rate. The straight-line rate is 1/10 = 10%, so the double rate is 20%. For 2017, depreciation is $100,000 * 20% * 8/12 = $13,333. For 2018, it's ($100,000 - $13,333) * 20% = $17,333.

Gary Kraen Company Purchased Equipment on May 1, 2017 for $100,000