JoyCo acquired equipment on April 1, 2017, at a cost of $90,000 and with an estimated useful life of 10 years. The machine has a residual value of $10,000. JoyCo uses thedouble-declining-balance method of depreciation. How much depreciation should be recorded by JoyCo for the year ended December 31, 2017?

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%, so the double rate is 20%. For 2017, depreciation is calculated for 9 months (April to December). Depreciation for 2017 = $90,000 * 20% * (9/12) = $13,500.

JoyCo Acquired Equipment on April 1, 2017, at a Cost