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vcutter enterprises purchased equipment for $93,000 on january 1, 2024. the equipment is expected to have a five-year life and a residual value of $5,700. using the double-declining-balance method, depreciation for 2024 and the book value on december 31, 2024, would be:

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Answer:

Under the double-declining-balance method, the annual depreciation expense is calculated as a percentage of the book value of the asset at the beginning of the year, and the percentage is double the straight-line rate.

The straight-line rate is calculated as 1 / useful life, which in this case is 1/5 = 0.20 or 20%. Double that rate gives us the double-declining-balance rate of 2 x 20% = 40%.

So, for the first year, the depreciation expense would be:

Depreciation expense = Book value at beginning of year x Double-declining-balance rate

Depreciation expense = $93,000 x 40%

Depreciation expense = $37,200

The book value at the end of the first year would be:

Book value = Cost - Accumulated depreciation

Book value = $93,000 - $37,200

Book value = $55,800

For the second year, the depreciation expense would be:

Depreciation expense = Book value at beginning of year x Double-declining-balance rate

Depreciation expense = $55,800 x 40%

Depreciation expense = $22,320

The book value at the end of the second year would be:

Book value = Cost - Accumulated depreciation

Book value = $93,000 - $37,200 - $22,320

Book value = $33,480

The book value on December 31, 2024, would be the same as the book value at the end of the second year, which is $33,480.

Therefore, the depreciation for 2024 would be $37,200 and the book value on December 31, 2024, would be $33,480.

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