A piece of equipment costing $15,000 is depreciated using the double declining b

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What’s inside this PDF?

Question: A piece of equipment costing $15,000 is depreciated using the double declining balance method. What is the depreciation expense for the first year?

Options:

$3,750
$4,500
$5,000
$6,000

Correct Answer: $4,500

Solution:

Depreciation Expense = Book Value at Beginning of Year x (2 / Useful Life) = $15,000 x (2 / 5) = $6,000.

A piece of equipment costing $15,000 is depreciated using the double declining b

Practice Questions

A piece of equipment costing $15,000 is depreciated using the double declining balance method. What is the depreciation expense for the first year?

$3,750
$4,500
$5,000
$6,000

Questions & Step-by-Step Solutions

A piece of equipment costing $15,000 is depreciated using the double declining balance method. What is the depreciation expense for the first year?

Step 1: Identify the cost of the equipment. In this case, it is $15,000.
Step 2: Determine the useful life of the equipment. Here, it is given as 5 years.
Step 3: Calculate the depreciation rate using the double declining balance method. The formula is (2 / Useful Life). So, (2 / 5) = 0.4 or 40%.
Step 4: Calculate the depreciation expense for the first year. Use the formula: Depreciation Expense = Book Value at Beginning of Year x Depreciation Rate. Here, it is $15,000 x 0.4 = $6,000.

Double Declining Balance Method – A method of accelerated depreciation that calculates depreciation based on a fixed percentage of the book value of the asset at the beginning of each year.
Depreciation Expense Calculation – The process of determining the amount of depreciation to be recorded for an asset in a given period.
Useful Life – The estimated duration over which an asset is expected to be used, which affects the depreciation calculation.

A piece of equipment costing $15,000 is depreciated using the double declining b

What’s inside this PDF?

A piece of equipment costing $15,000 is depreciated using the double declining b

Practice Questions

Questions & Step-by-Step Solutions

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