Use the following information for questions 45-46.
Picton Farms purchased some equipment on January 1, 2017 for $12,600. The equipment has an estimated useful life of 10 years and an estimated residual value of $1,200. The company uses double-declining-balance depreciation.
-The net book value on January 1, 2018 would be
A) $10,080.
B) $10,320.
C) $11,340.
D) $11,460.

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/10 = 10%. Double that to get 20%. Depreciation for 2017 is 20% of $12,600 = $2,520. Subtracting this from the initial cost gives a net book value of $10,080 on January 1, 2018.

Use the Following Information for Questions 45-46