Question

Kansas Enterprises purchased equipment for $78,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $8,100 at the end of ten years. Using the double-declining balance method, depreciation expense for 2022 would be:_______.
a. $21,600.b. $24,800.c. $36,000.d. $45,600.

Answer 1

Answer:

$12,480

Explanation:

The computation of the depreciation expense for 2022 is shown below:

The depreciation rate is given below:

= One ÷ service life

= 1 ÷ 10

= 0.10

Now the rate is double So, 20%

In the year 2021, the purchase value of the equipment is $78,000, so the depreciation is $15,600 after applying the 20% depreciation rate

And, in the year 2022, the depreciation rate is  

= ($78,000 - $15,600) × 20%

= $62,400 × 20%

= $12,480

The residual value should not be considered while using the double-declining balance method.

This is the answer but the same is not provided in the given options