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?

Question

Quizplus · Accepted Answer

$50,000 x 40% = $20,000 depreciation in the first year.
($50,000 - 20,000) x 40% = $12,000 depreciation in the second year.
Depreciation rate = 2/5 = 40%.

Shasta Exploring Purchases a Piece of Equipment on January 1