On January 1 of the current year,a company purchased a plant asset for $120,000.The asset has an estimated salvage value of $16,000,and an estimated useful life of 8 years.Depreciation expense in the first year using the double-declining-balance method is $30,000.

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line rate. The straight-line depreciation rate for an asset with a useful life of 8 years is 1/8 (or 12.5%). Doubling this rate gives 25%. Applying the 25% rate to the asset's beginning book value of $120,000 results in a depreciation expense of $30,000 for the first year.

On January 1 of the Current Year,a Company Purchased a Plant