Question

Kansas Enterprises purchased equipment for $79,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $6,000 at the end of ten years.

Using the double-declining balance method, depreciation expense for 2021 would be: (Do not round your intermediate calculations)

Answer 1

Using the double-declining balance method, the depreciation expense for 2021 would be $15,800.

Step-by-step explanation:

The double-declining balance method is a depreciation method that allows for a larger depreciation expense in the early years of an asset's life, and a smaller expense in the later years.

To calculate depreciation expense using this method, you need to first determine the asset's useful life and residual value. In this case, the equipment has a useful life of ten years and a residual value of $6,000.

To calculate the annual depreciation expense, you divide the asset's remaining book value by its remaining useful life. The book value is the asset's original cost minus accumulated depreciation.

In the first year, the formula would be:

Depreciation Expense = (2 / Useful Life) * Book Value

Substituting the given values:

Depreciation Expense = (2 / 10) * ($79,000 - $0) = $15,800