Cutter Enterprises purchased equipment for $57,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $5,700. Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be: Multiple Choice $20,520 and $33,780 respectively. $22,800 and $34,200 respectively. $20,520 and $36,480 respectively. $22,800 and $28,500 respectively.

Question

Ethen Copeland

Business

8 September, 17:35

Cutter Enterprises purchased equipment for $57,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $5,700. Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be: Multiple Choice $20,520 and $33,780 respectively. $22,800 and $34,200 respectively. $20,520 and $36,480 respectively. $22,800 and $28,500 respectively.

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Answers (1)

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Damien Munoz · Answer 1

The correct answer is C.

Explanation:

Giving the following information:

Purchasing price = $57,000

Useful life = five-year

Residual value = $5,700.

To calculate the depreciation expense under the double-declining balance, we need to use the following formula:

Annual depreciation = 2*[ (book value) / estimated life (years) ]

Annual depreciation = 2*[ (57,000 - 5,700) / 5]

Annual depreciation = $20,520

Book value = 57,000 - 20,520

Book value = $36,480