Rockport Company purchased equipment for $30,000 on January 1, 2013, and will use the diminishing-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $3,000 residual value at the end of its useful life. The amount of depreciation expense recognized in the year 2015 will be

Question

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The diminishing-balance method of depreciation allocates more depreciation expense to the early years of an asset's life. The depreciation rate is applied to the book value of the asset, which is the cost of the asset minus the accumulated depreciation. In this case, the depreciation rate is 200% / 3 = 66.67%. The depreciation expense for 2015 is $30,000 * 66.67% * 2/3 = $4,444.

Rockport Company Purchased Equipment for $30,000 on January 1, 2013