Kansas Enterprises purchased equipment for $60,000 on January 1,2018.The equipment is expected to have a five-year life,with a residual value of $5,000 at the end of five years.Using the double-declining balance method,depreciation expense for 2019 would be:

Question

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The double-declining balance method involves doubling the straight-line depreciation rate. The straight-line depreciation rate for a 5-year life asset is 20% (100% / 5 years). Doubling this gives a depreciation rate of 40% per year. For the first year (2018), the depreciation would be 40% of $60,000, which is $24,000. This leaves a book value of $36,000 ($60,000 - $24,000) at the beginning of 2019. Applying the 40% rate to the book value at the beginning of 2019 ($36,000) gives a depreciation expense of $14,400 for 2019.

Kansas Enterprises Purchased Equipment for $60,000 on January 1,2018