Question

A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its five-year useful life.

The constant percentage to be applied against book value each year if the double-declining-balance method is used is:

a. 20%
b. 25%
c. 40%
d. 4%

Answer 1

40 %

Step-by-step explanation:

The double depreciation method is an accelerated depreciation on the straight-line method.

Double depreciation rate= straight-line rate x 2

in his case

Depreciation rate=( 1/useful x 100 )x2

=(1/5x100) x 2

=20% x2

=40 %