Exhibit 11-1 On January 1, 2014, Hills purchased equipment for $350,000. The equipment had an estimated useful life of ten years and an estimated residual value of $50,000. Use the double-declining-balance method to answer the following question(s).
-Refer to Exhibit 11-1. How much depreciation should Hills record on the asset in year 1?

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/10 = 10%, so double is 20%. Depreciation for year 1 is 20% of $350,000, which is $70,000.

Exhibit 11-1 on January 1, 2014, Hills Purchased Equipment for $350,000