A piece of equipment was acquired on January 1, 2018, at a cost of $48,000, with an estimated residual value of $2,000 and an estimated useful life of eight years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?
| Ans. | Double declining balance method: | |||||
| Double declining balance depreciation rate = 2 * 1 / life of assets | ||||||
| 2 * 1 / 8 | ||||||
| 25% | ||||||
| *Depreciation = Beginning of period book value * Double declining balance depreciation rate | ||||||
| DDB Depreciation for the Period | End of Period | |||||
| Year | Beginning of period | Depreciation | Depreciation | Accumulated | Book | |
| Book value | Rate | Expenses (a * b) | Depreciation | Value | ||
| 31-Dec-18 | $48,000 | 25% | $12,000 | $12,000 | $36,000 | |
| 31-Dec-19 | $36,000 | 25% | $9,000 | $21,000 | $27,000 | |
| Ending book value = Beginning of period book value - Accumulated depreciation | ||||||
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