Beynon Corp. purchased office equipment for $20,000, with an estimated residual value of $4,000 at the end of its 8-year useful life. Assuming the double diminishing-balance method is used, the constant percentage to be applied against the carrying amount each year is
A) 10%.
B) 12.5%.
C) 25%.
D) not determinable.

Question

Quizplus · Accepted Answer

The double diminishing-balance method uses twice the straight-line rate. The straight-line rate is 1/8 (useful life), which is 12.5%. Therefore, the double diminishing-balance rate is 25%.