Equipment is purchased for $80,000. It has an eight-year useful life and a $42,750 residual value. Under the double-declining-balance method, what is the depreciation expense for year 3?
A) $11,250
B) $1,750
C) $2,250
D) $2,750

Question

Quizplus · Accepted Answer

Under the double-declining-balance method, the annual depreciation is calculated as (2 / useful life) * book value at the beginning of the year. 
Book value at the beginning of year 3 = $80,000 - (2 * (80,000 - 42,750) / 8) * 2 = $19,250 
Depreciation expense for year 3 = (2 / 8) * $19,250 = $4,812.50 
Therefore, the closest option is C: $2,250.

Equipment Is Purchased for $80,000