On January 1,Year 1,Zach Company purchased equipment that cost $50,000.The equipment had a useful life of 5 years and a $10,000 salvage value.Zach Company used the double-declining-balance method to depreciate its assets.What is the accumulated depreciation at the end of Year 2?
A)$10,000
B)$12,000
C)$20,000
D)$32,000

Question

Quizplus · Accepted Answer

Double-declining-balance rate = (1 ÷ 5)× 2 = 40%
Year 1 depreciation expense = Book value at beginning of year of $50,000 × 40% = $20,000
Book value at end of Year 1 = Cost of $50,000 - Accumulated depreciation of $20,000 = $30,000
Year 2 depreciation expense = Book value at beginning of year of $30,000 × 40% = $12,000
Accumulated depreciation at end of Year 2 - $20,000 + $12,000 = $32,000

On January 1,Year 1,Zach Company Purchased Equipment That Cost $50,000