Question

Moreno Company purchased equipment for $450,000 on January 1, 2010, and will usethe double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $20,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2012 will be

Answer 1

Answer:

Depreciation expense 2012= $31,851.85

Explanation:

Giving the following information:

Moreno Company purchased equipment for $450,000 on January 1, 2010. It is estimated that the equipment will have a 3-year life and a $20,000 salvage value at the end of its useful life.

To calculate the depreciation expense under the double-declining balance, we need to use the following formula for each year:

Annual depreciation= 2*[(book value)/estimated life (years)]

2010= 2*[(450,000 - 20,000)/3]= 286,666.67

2011= 2*[(430,000 - 286,666.67)/3]= 95,555.55

2012= 2*[(143,333.33 - 95,555.55)/3]= $31,851.85