Question

On January​ 1, 2017 Smart Touch Learning purchased equipment for $ 140000 with an estimated useful life of 5 years and a residual value of $ 6 000. Under the​ double-declining depreciation​ method, what is depreciation expense for the equipment in 2017​?

Answer 1

The depreciation expense for the equipment in 2017 using the double-declining depreciation method is $54,400.

Step-by-step explanation:

The depreciation expense for the equipment in 2017 can be calculated using the double-declining depreciation method. The double-declining method involves calculating depreciation at a rate double that of the straight-line method.

First, we need to calculate the straight-line depreciation rate:

Straight-line depreciation rate = (Cost - Residual value) / Useful life

For the given equipment, the straight-line depreciation rate would be:

Straight-line depreciation rate = ($140,000 - $6,000) / 5 = $27,200

Next, we apply the double-declining rate to calculate the depreciation expense for 2017:

Depreciation expense for 2017 = Double-declining rate * (Cost - Accumulated depreciation)

Since this is the first year of depreciation, the accumulated depreciation is zero. Therefore, the depreciation expense for 2017 would be:

Depreciation expense for 2017 = 2 * Straight-line depreciation rate = 2 * $27,200 = $54,400