Question

On January​ 1, 2017 Smart Touch Learning purchased equipment for $ 20000 with an estimated useful life of 5 years and a residual value of $ 4000. 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 under the double-declining balance method is $8,000.

Step-by-step explanation:

The depreciation expense for the equipment in 2017 can be calculated using the double-declining balance method. This method applies a constant rate to the book value of the asset each year.

The formula to calculate the depreciation expense is: Depreciation Expense = (1/Useful Life) x 2 x Book Value.

In this case, the useful life is 5 years and the book value in the first year is $20,000 (cost - residual value).

Substituting the values into the formula, we get: Depreciation Expense = (1/5) x 2 x $20,000 = $8,000.