Question

Kingston Company purchased a piece of equipment on January 1, 2015. The equipment cost $200,000 and had an estimated life of 8 years and a salvage value of $25,000. What was the depreciation expense for the asset for 2016 under the double-declining-balance method

Answer 1

Annual depreciation= $32,812.5

Step-by-step explanation:

Giving the following information:

The equipment cost $200,000 and had an estimated life of 8 years and a salvage value of $25,000.

To calculate the annual depreciation expense, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

2015:

Annual depreciation= 2*[(200,000 - 25,000) / 8]

Annual depreciation= $43,750

2016:

Annual depreciation= 2*[(175,000 - 43,750) / 8]

Annual depreciation= $32,812.5