Question

Jefferson Company purchased equipment on January 1, 2017. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the equipment for 2018 under the double-declining-balance method?

Answer 1

The depreciation expense for Jefferson Company's equipment in 2018 using the double-declining-balance method is $11,250, after calculating the double-declining rate and applying it to the book value at the beginning of 2018.

Step-by-step explanation:

The depreciation expense for 2018 for Jefferson Company's equipment under the double-declining-balance method can be calculated as follows:

• Calculate the double-declining rate: 100% / 8 years life = 12.5% annual depreciation rate. The double rate would be 12.5% * 2 = 25%.
• Determine the book value at the beginning of 2018: $60,000 initial cost - $15,000 depreciation for 2017 (25% of $60,000) = $45,000.
• Calculate 2018 depreciation: 25% of $45,000 = $11,250.

The depreciation expense for the equipment in 2018 is $11,250.

Answer 2

Answer: $11250

Step-by-step explanation:

Based on the information given in the question, the depreciation expense for the equipment for 2018 under the double-declining-balance method will be calculated thus:

Cost of Equipment = $60,000

Salvage Value = $8,000

Useful Life = 8 years

Double-declining-balance Depreciation Rate will be calculated as:

= 2 / Useful Life

= 2 / 8

= 25%

For 2017:

Beginning Book Value = $60,000

Depreciation Expense = 25% × $60,000 = $15,000

Ending Book Value = $60,000 - $15,000 = $45,000

2018:

Beginning Book Value = $45,000

Depreciation Expense = 25% × $45,000 = $11,250

Therefore, the depreciation expense for the equipment for 2018 under the double-declining-balance method is $11250.

Note that:

Ending Book Value = Beginning Book Value - Depreciation Expense