A company purchased office equipment for $40000 and estimated a salvage value of $8000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

A) 20%.
B) 25%.
C) 40%.
D) 5%.

Question

Jarrod Shepard · Accepted Answer

Final Answer : C, Explanation :  The double-declining-balance method uses a constant percentage rate to calculate depreciation. The formula for this method is:(2 / Useful life in years) x Book value at the beginning of the yearIn this case, the useful life is 5 years, so the percentage rate is:(2 / 5) = 0.4 or 40%Therefore, the correct answer is C, 40%.

A company purchased office equipment for $40000 and estimated a salvage value of $8000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

A) 20%.
B) 25%.
C) 40%.
D) 5%.

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Learning Objectives

Related questions

A company purchased office equipment for $40000 and estimated a salvage value of $8000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used isA) 20%.B) 25%.C) 40%.D) 5%.

Definitions

Learning Objectives

Learning Objectives

Related questions

A company purchased office equipment for $40000 and estimated a salvage value of $8000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

A) 20%.
B) 25%.
C) 40%.
D) 5%.