On January 1, 2016, equipment was purchased for $80,000; the equipment's estimated residual value is $15,000, and its estimated useful life is 10 years. For 2016, the depreciation expense under the double-declining balance method is $13,000.

Question

Quizplus · Accepted Answer

To calculate the depreciation expense using double-declining balance method, first we divide 100% by the useful life of the asset, which gives us a depreciation rate of 10%. Then, we double this rate to get 20%. 
For the first year (2016), we apply this rate to the beginning book value (cost - accumulated depreciation) of the asset, which is $80,000 - $0 = $80,000. Thus, depreciation expense for 2016 should be $16,000 (20% x $80,000).
Therefore, the given depreciation expense for 2016 is incorrect, making the answer B (False).

On January 1, 2016, Equipment Was Purchased for $80,000; the Equipment's