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    malthermia's Avatar
    malthermia Posts: 2, Reputation: 1
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    #1

    Feb 20, 2008, 07:12 AM
    Double-Declining-Balance Depreciation Expense
    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's Avatar
    MaggieMouse Posts: 226, Reputation: 8
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    #2

    Feb 20, 2008, 01:29 PM
    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.
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