On January 1,2016,Baker Co.purchased equipment for $100,000.It has an estimated useful life of five years,and its residual value is $10,000.If it uses the double declining balance method,what is the amount of accumulated depreciation as of December 31,2017?
A) $36,000
B) $40,000
C) $64,000
D) $80,000

Question

Quizplus · Accepted Answer

- Double declining balance rate = 2/5 = 0.4 or 40%
- First year depreciation = $100,000 x 40% = $40,000
- Second year depreciation = ($100,000 - $40,000) x 40% = $24,000
- Total accumulated depreciation after 2 years = $40,000 + $24,000 = $64,000