Shasta Exploring purchases a piece of equipment on January 1,2012,for $50,000 and the equipment has an expected useful life of five years.Its residual value is estimated to be $4,000.Assuming Shasta uses the double-declining balance depreciation method,what is the depreciation expense for the equipment for 2013?

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Quizplus · Accepted Answer

The double-declining balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so double is 40%. For 2012, depreciation is $50,000 x 40% = $20,000. For 2013, depreciation is ($50,000 - $20,000) x 40% = $12,000.

Shasta Exploring Purchases a Piece of Equipment on January 1,2012,for