Question

A piece of equipment was acquired on January 1, 2018, at a cost of $36,000, with an estimated residual value of $3,000 and an estimated useful life of six years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?

Answer 1

In double declining method is a form of an accelerated depreciation method in which asset value is depreciated at twice the rate it is done in the straight line method.in this we multiply rate by 2.

Explanation:

we will calculate rate of depreciation by dividing 100% by useful life of an asset

i.e. , $\frac{100}{6}$=16.66%

now we will multiply by 2 = 16.67% × 2

                                           = 33.34%

now calculation depreciation by multiplying book value at begining with 33.34%

which will give depreciation from 1 January  2018 to 31 December 2018

=33.34%×$36000

=$12000 (approx.)

So book value on  December 31 ,2019 will be $24000 ($36000-$12000).