Jim Kindel purchased equipment for $49,000 on January 1. Its residual value is $4,900 with a useful life of 10 years. The amount of depreciation expense in the first year under the double declining-balance method is:

Question

Quizplus · Accepted Answer

The double declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/10 (10% per year), so the double rate is 20%. The first year's depreciation is 20% of the book value at the beginning of the year, which is $49,000. Therefore, $49,000 * 20% = $9,800.

Jim Kindel Purchased Equipment for $49,000 on January 1