Question

On January 1, year 1, LaRose Corp. purchases equipment for $100,000. LaRose uses the double-declining-balance method of depreciation. The asset has a 5-year service life and a $10,000 residual value. What is depreciation expense for year 1?

Answer 1

Depreciation Expense for the year 1 is $40,000.

Step-by-step explanation:

The depreciation expense can be calculated using the double declining balance formula which is as under:

Double declining depreciation expense = Cost / Useful life * 2

By putting the values, we have:

Double declining depreciation expense = $100,000 / 5 years * 2

Double declining depreciation expense = $40,000

The depreciation expense for the first year is $40,000.