A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the double-declining-balance method, the depreciation expense for the first year of the asset's useful life is

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 or 20%, so the double rate is 40%. The first year's depreciation is 40% of $50,000, which is $20,000.

A Firm Purchases an Asset for $50,000 and Estimates That