Equipment with a cost of $160 000 has an estimated residual value of $10 000 and an estimated useful life of four years. The equipment is to be depreciated by the reducing balance method (at twice the straight-line rate). What is the amount of depreciation for the first full year?
A) $40 000
B) $75 000
C) $80 000
D) $85 000

Question

Quizplus · Accepted Answer

The reducing balance method at twice the straight-line rate means that the annual depreciation rate is 2/4 = 50%.

Year 1 depreciation = (cost - residual value) x annual rate 
= ($160,000 - $10,000) x 50% 
= $75,000

Therefore, the amount of depreciation for the first full year is $80 000.

Equipment with a Cost of $160 000 Has an Estimated