A piece of equipment was acquired on January 1, 2015, at a cost of $94,000, with
ID: 2569035 • Letter: A
Question
A piece of equipment was acquired on January 1, 2015, at a cost of $94,000, with an estimated residual value of $2,000 and an estimated useful life of Four years. The company uses the double-declining-balance method. What is its book value at December 31, 2016?
$48,000
$47,000
$46,000
$23,500
A piece of equipment was acquired on January 1, 2015, at a cost of $94,000, with an estimated residual value of $2,000 and an estimated useful life of Four years. The company uses the double-declining-balance method. What is its book value at December 31, 2016?
Explanation / Answer
Depreciation rate as per straight line method=(100/4)-25%/year
Hence depreciation as per double decline balance=2*Depreciation rate as per straight line method*Book value at beginning of each period
Year Beginning value Depreciation Ending value 2015 94000 (2*25%*94000)=$47000 (94000-47000)=$47000 2016 47000 (2*25%*47000)=$23500 (47000-23500)=$23500(D)Related Questions
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