A company purchased office equipment for $40000 and estimated a salvage value of $8000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

Question

Quizplus · Accepted Answer

The double-declining-balance method uses a constant percentage rate to calculate depreciation. The formula for this method is:

(2 / Useful life in years) x Book value at the beginning of the year

In this case, the useful life is 5 years, so the percentage rate is:

(2 / 5) = 0.4 or 40%

Therefore, the correct answer is C, 40%.

A Company Purchased Office Equipment for $40000 and Estimated a Salvage