At the beginning of the current year a firm purchased an asset for $60,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the double-declining-balance method, the depreciation expense for the first year of the asset's useful life is:

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line depreciation rate. The straight-line depreciation rate for an asset with a 5-year useful life is 20% (100% / 5 years). Doubling this rate gives 40%. Applying this 40% rate to the asset's beginning value of $60,000 results in a first-year depreciation expense of $24,000 (40% of $60,000).

At the Beginning of the Current Year a Firm Purchased