On January 2,2015,Mumford Corporation acquired equipment for $80,000.The estimated life of the equipment is 4 years.The estimated residual value is $5,000.What is the amount of depreciation expense for 2016,if the company uses the double-declining-balance method of depreciation?

Question

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 rate is 50%. For 2015, depreciation is 50% of $80,000 = $40,000. For 2016, it's 50% of the remaining book value ($80,000 - $40,000) = $20,000.

On January 2,2015,Mumford Corporation Acquired Equipment for $80,000