Equipment was purchased for $36,000 on October 1, 2019. Its estimated useful life is four years with a $2,100 expected salvage value. Using double-declining balance depreciation, the 2020 depreciation expense is:

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Quizplus · Accepted Answer

The double-declining balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/4 (25%) for a 4-year life. Double that is 50%. For 2019, depreciation is $36,000 x 50% x 3/12 = $4,500. For 2020, depreciation is ($36,000 - $4,500) x 50% = $15,750.

Equipment Was Purchased for $36,000 on October 1, 2019