Clear Window Cleaners
Clear Window Cleaners purchased new cleaning equipment at the beginning of 2011. The equipment has a cost of $53,000, an estimated life of 5 years, and an estimated residual value of $3,000. A full year's depreciation expense is to be recorded in 2011. The equipment was used 20,000 hours during 2011 and 24,000 hours during 2012. The number of expected hours over five years is 125,000.
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Refer to the information provided for Clear Window Cleaners. By what amount would double-declining-balance depreciation exceed straight-line depreciation over the 5-year life of the equipment?
A) The salvage value of $3,000.
B) Cost less total depreciation.
C) Cost plus total depreciation.
D) Total depreciation expenses under double-declining-balance and straight-line depreciation are equal.

Question

Clear Window Cleaners 
Clear Window Cleaners purchased new cleaning equipment at the beginning of 2011. The equipment has a cost of $53,000, an estimated life of 5 years, and an estimated residual value of $3,000. A full year's depreciation expense is to be recorded in 2011. The equipment was used 20,000 hours during 2011 and 24,000 hours during 2012. The number of expected hours over five years is 125,000.
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Refer to the information provided for Clear Window Cleaners. By what amount would double-declining-balance depreciation exceed straight-line depreciation over the 5-year life of the equipment?
A) The salvage value of $3,000.
B) Cost less total depreciation.
C) Cost plus total depreciation.
D) Total depreciation expenses under double-declining-balance and straight-line depreciation are equal.

Quizplus · Accepted Answer

Over the 5-year life of the equipment, total depreciation expenses under both double-declining-balance and straight-line methods will equal the cost minus the residual value, so they are equal.