Question

A company buys a piece of equipment for $48,000. The equipment has a useful life of ten years. No residual value is expected at the end of the useful life. Using the double-declining-balance method, what is the company's depreciation expense in the first year of the equipment's useful life

Answer 1

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Answer 2

The depreciation expense in the first year of the equipment is $9600.

During the asset's anticipated useful life, depreciation is allocated in order to charge a fair percentage of the depreciable amount in each accounting period. Amortization of assets with predetermined useful lives is included in depreciation.

What is the double-declining-balance method?

A method of accounting known as the double declining balance (DDB) depreciation method entails depreciating some assets at a rate that is twice that of straight-line depreciation. As a result, depreciation increases during the first year of ownership and decreases thereafter.

Given,

Equipment = $48,000

Useful Life = 10 years

Required to calculate Depreciation expense for the First year =?

Rate of Depreciation under double-declining-balance method = 100 Divided by Useful Life multiplied by 2.

Rate of Depreciation = 100 x 2/10 = 20%.

Depreciation expense for the First year = 48000 x 20% = $9600

Thus, the Depreciation expense for the first year is $9600 and the book value for the equipment at the end of the first year is $38400.

Learn more about the double-declining-balance method here:

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