Double-Declining-Balance Depreciation Expense

malthermia · #1 Feb 20, 2008, 05:12 AM

Equipment is purchased for $80,000. It has an 8 year useful life and $39000 residual value. Under the doubl-declining-balance method, what is the depreciation expense for year 3?

a. 6,000
b. 48,000
c. 11,250
d. 8,436

I keep coming up with 11250 but according to the teacher the answer is 6,000. I can't figure out what I'm doing wrong.

Thanks

MaggieMouse · Feb 20, 2008, 11:29 AM

Because your accumulated depreciation cannot exceed its useful value. 80000-39000=41000-20000(1st)-15000(2nd)=6000, not 11250.

Still need to watch out even you know how to use the double declining method, here is a trick trying to get you. Read you textbook, there must be one line saying that you cannot over-depreciate.



At Ask Me Help Desk you can ask questions in any topic and have them answered for free by our experts. To ask questions or participate in answering them you must register for a free account. By registering you will be able to: Get free answers from experts in any of our 300+ topics. Accept money for answers that you provide. Communicate privately with other members (PM). See fewer ads. Sign Up!