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A piece of equipment was acquired on January 1, 2018, at a cost of $25,000, with...

A piece of equipment was acquired on January 1, 2018, at a cost of $25,000, with an estimated residual value of $5,000 and an estimated useful life of five years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?

a. $8,000

b. $10,000

c. $9,000

d. $17,000

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Answer #1

Correct answer-----------c. $9,000

Working

Double declining Method
A Cost $ 25,000
B Residual Value $ 5,000
C=A - B Depreciable base $ 20,000
D Life [in years] 5
E=C/D Annual SLM depreciation $ 4,000
F=E/C SLM Rate 20.00%
G=F x 2 DDB Rate 40.00%

.

Depreciation schedule-Double declining
Year Beginning Book Value Depreciation rate Depreciation expense Accumulated Depreciation Ending Book Value
2018 $ 25,000 40.00% $ 10,000 $ 10,000 $ 15,000
2019 $ 15,000 40.00% $ 6,000 $ 16,000 $ 9,000
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