Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of five years. Determine the (a) depreciable cost (b) double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.

Question

Business

Preston

31 August, 18:29

Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of five years. Determine the (a) depreciable cost (b) double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.

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Answers (1)

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Nigel Farmer · Answer 1

a. $60,000

b. 40%

c. $25,200

Explanation:

The calculation of the depreciation expense for the first year is computed below:

a) The depreciation cost would be

= Acquired value of equipment - estimated residual value

= $63,000 - $3,000

= $60,000

Double-declining balance method:

(B) First we must consider the rate of depreciation as shown below:

= One : useful life

= 1 : 5

= 20%

Now the rate is double So, 40%

(C) In year 1, the original cost is $63,000, so the depreciation is $25,200 after applying the 40% depreciation rate