Question

Cutter Enterprises purchased equipment for $66,000 on January 1, 2021. The equipment is expected to have...

Cutter Enterprises purchased equipment for $66,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,300.

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

Multiple Choice Listed:

  • $13,200.

  • $22,860.

  • $24,960.

  • $23,760

Business   Accounting   
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Homework Answers

Answer #1

The correct answer is $23,760

Explanation:

Given

Cost of equipment = $66,000

Date of purchase = January 1,2021

Useful period = 5 years

Residual value = $ 6,300

Particular Amount
Percentage of depreciation ( 1 / 5) *2 40%
Depreciation for December 31,2021 ( $66,000 * 40%) $26,400
Book value on December 31,2021 ($66,000 - $26,400) $39,600
Depreciation expense for December 31,2022 ($39,600 * 40%) $15,840
Book value on December 31,2022 ($39,600 - $15,840) $23,760
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