On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.Ace Electronics uses the double-declining balance method to depreciate its assets.The book value of the computer at December 31,2013 is ________.

Question

Quizplus · Accepted Answer

The double-declining balance method involves depreciating the asset at twice the straight-line rate. For a 5-year life, the straight-line rate is 20%, so the double-declining rate is 40%. The depreciation for each year is calculated on the book value at the beginning of the year. After 3 years (2011, 2012, and 2013), the book value is $86,400.

On January 1,2011,Ace Electronics Paid $400,000 Cash for a Computer