An asset has a cost of $80 000, estimated residual value of $20 000 and estimated useful life of five years. What is the amount of the depreciation expense for the first year, assuming the reducing-balance method is used and the annual rate is 30%?
A) $12 000
B) $16 000
C) $18 000
D) $24 000

Question

Quizplus · Accepted Answer

The first year's depreciation expense using the reducing-balance method at a 30% rate is calculated on the initial cost of the asset. Thus, $80,000 * 30% = $24,000.

An Asset Has a Cost of $80 000, Estimated Residual