Question

Sonoma Company purchased equipment for $66,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,600.

Using the double-declining-balance method, the book value at December 31, 2022, would be:

Multiple Choice

• $23,760.

• $13,200.

• $24,960.

• $22,860.

Answer 1

Answer:

Book value at December 31, 2022 =$23,760

Depreciation expenses under double declining balance method

DDB rate

=straight-line rate x 2

= (100/5) x2

=20% x2

=40%

Year	Assets cost	Book vakue		DDB rate	Depreciation Expense	Accumulated depreciation	Book Value
		(A)		(B)	(C=A*B)	(D)	(66000-D)
0	66000
2021		66000	x	40%	26400	26400	39600
2022		39600	x	40%	15840	42240	23760