Bolton, Inc. purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have...

Bolton, Inc. purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $7,800.

Using the double-declining balance method, depreciation for 2019 would be:

Expert Solution

All working forms part of the answer
Workings

A	Cost	$ 87,000.00
B	Residual Value	$ 7,800.00
C=A - B	Depreciable base	$ 79,200.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$ 15,840.00
F=E/C	SLM Rate	20.00%
G=F x 2	DDB Rate	40.00%

Year	Beginning Book Value	Depreciation rate	Depreciation expense	Ending Book Value
2018	$ 87,000.00	40.00%	$ 34,800.00	$ 52,200.00
2019	$ 52,200.00	40.00%	$ 20,880.00 [ANSWER]	$ 31,320.00

Answer: Depreciation for 2019 = $ 20,880 [Double Declining Balance Method]

ekkarill92 answered 2 years ago

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