A piece of equipment was acquired on January 1, 2018, at a cost of $22,000, with an estimated residual value of $2,000 and an estimated useful life of Four years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?
A. $12,000
B. $10,000
C. $11,000
D. $5,500
Answer - (D) $5500
As per double declining method depreciation is double the straight line method rate and declines based on the book value of previous year, So now computation of its book value
Depreciation rate = 2 * (100% / 4 years or 25%)
So rate is 50%
At the end of Year | Begining book value | Depreciation | Ending book value |
2018 | 22000 | 11000 (22000*50%) | 11000 |
2019 | 11000 | 5500 | 5500 |
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