A company bought a piece of equipment for $40,000,expecting to use it for eight years.The company then plans to sell it for $3,500.The company has already recorded depreciation of $35,995.Using the double-declining-balance method,the company's annual depreciation expense for the upcoming year would be:
A)$1,001.
B)$9,125.
C)$505.
D)$10,000.

Question

Quizplus · Accepted Answer

Depreciation in final year = (Cost - Residual Value)- Accum.Deprec.to date Depreciation in final year = ($40,000 - $3,500)- $35,995 Depreciation in final year = $505 as the carrying value cannot go below the residual value.

A Company Bought a Piece of Equipment for $40,000,expecting to Use