Homework Answers
17. Answer: b. the depreciation rate by each year’s beginning book value.
Under the double-declining balance method, the depreciation rate is the double of the straight-line depreciation rate. This depreciation rate is multiplied by the beginning book value of the asset each year in order to arrive at the depreciation expense for the year. Hence, option b. is the correct option.
1. Answer: a. acquired and placed in service.
An asset begins depreciating when it is placed in service and as long as it continues in service. Thus, it starts getting depreciated only when it is acquired and placed in service which is a pre-condition for computing depreciation under both GAAP and tax. Hence, option a. is the correct answer.
No depreciation is charged if an asset is only acquired but is yet to be placed in service.
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