Question

A company bought a piece of equipment for $43,700 and expects to use it for eight years. The company then plans to sell it for $4,300. The company has already recorded depreciation of $37,866.76. Using the double-declining-balance method, what is the company's annual depreciation expense for the upcoming year?

Answer 1

	CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD
	Purchase Cost of Equipment	$                      43,700
	Useful Life =	8 years
	Depreciation per year =	$                  5,462.50
	(Purchase price / Useful life)
	CALCULATION OF THE RATE OF DEPRECIATION
	Rate of Depreciation =	$ 5,462.50 / $ 43,700
	(Depreication / Purchase price )
	Rate of Depreciation =	0.125 or 12.5%
	Double decline deprection rate = 12.5% * 2 =	25%
	Purchase price =	$                      43,700
	Depreciation for the year @ 25% =	$                      10,925
	Total Depreciation expenses of the upcoming year
	Already Recorded Depreciation =	37,866.76
	Add: Depreciation from new Equipment =	10,925.00
	Total Depreciation expenses of the upcoming year	48,791.76
	Answer = Total Depreciation = $ 48,791.76