Question

Shasta Exploring purchases a piece of equipment on January 1, 2012, for $50,000 and the equipment...

Shasta Exploring purchases a piece of equipment on January 1, 2012, for $50,000 and the equipment has an expected useful life of five years. Its residual value is estimated to be $4,000. Assuming Shasta uses the double-declining balance depreciation method, what is the depreciation expense for the equipment for 2013?

Group of answer choices $12,000 $11,040 $9,200 $9,040

Homework Answers

Answer #1

Answer = $ 12,000

Explanation :

Double Declining Balance = 2 * Straight line method rate
Straight line Method rate = 1 / Estimated useful Life
Straight line Method rate = 1 / 5 Years = 20 %
Double Declining Balance = 2 * Straight line method rate
Double Declining Balance = 2 * 20%
Double Declining Balance = 40%
Year Calculation of Depreciable Cost Depreciation Cost Percent Depreciation Amount
2012 Initial Cost $ 50,000 40% $ 20,000   {$50,000*40%}
2013 {$50,000 -$ 20,000 } $ 30,000 40% $ 12,000    {$30,000*40%}

So, The Depreciation expenses for the Equipment for 2013 is $ 12,0000

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