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Cutter Enterprises purchased equipment for 60,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $3,900. Using the double-declining-balance method, the book value at December 31, 2022, would be:____.
a. $15,500.
b. $15,980.
c. $18,380.
d. $27,900.

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Respuesta :

Tundexi

Answer:

$21,600

Explanation:

The expected life of the equipment is 5 years

Double-declining-balance rate = (1/5) *2 = 40%

Depreciation for 2021 = $60,000*40% = $24,000

Book Value at Dec 31, 2021 = $60,000 - $24,000

Book Value at Dec 31, 2021 = $36,000

Depreciation for 2022 = $36,000*40% = $14,400

Book Value at Dec 31, 2021 = $36,000 - $14,400

Book Value at Dec 31, 2021 = $21,600

Using the double-declining-balance method, the book value at December 31, 2022, would be $21,600.

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