Question

On January 2, 2017, X Company purchased equipment for $240,000. The equipment has an estimated useful life of 5 years and an estimated salvage value of $30,000. The equipment is being depreciated using the double-declining balance method. What will be the balance in accumulated depreciation at December 31, 2018?

Answer 1

	Depreciable amount	Depreciation rate	Depreciation
Year 1	$                       2,40,000	40%	$                                96,000
Year 2	$                       1,44,000	40%	$                                57,600
	(240000-96000)
Accumulated depreciation at dec-31-2018	$                             1,53,600
Under double declining balance method deprecation is calculate at double the rate of Straight -line depreciation
Depreciation rate on straight line method
Depreciation = 42000
	(240000-30000)/5
Depreciation rate = 20%
	(42000/210000)
There for depreciation rate on double decline balance method = 40%
			(20*2(double the rate)