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,the book value at December 31,2019 would be:

Question

Quizplus · Accepted Answer

The double-declining balance method involves depreciating the asset at twice the straight-line rate. The straight-line rate is 1/5 = 20%, so the double-declining rate is 40%. For 2018, depreciation is $60,000 * 40% = $24,000, leaving a book value of $36,000. For 2019, depreciation is $36,000 * 40% = $14,400, leaving a book value of $36,000 - $14,400 = $21,600.

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