Falling Leaves Lawn Care

This company purchased new excavating equipment at the beginning of 2019. The equipment has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2019. The equipment was used 20,000 hours during 2019 and 24,000 hours during 2020. The number of expected hours over 5 years is 100,000.
-Refer to Falling Leaves Lawn Care. 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 $7,000
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

Falling Leaves Lawn Care
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This company purchased new excavating equipment at the beginning of 2019. The equipment has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2019. The equipment was used 20,000 hours during 2019 and 24,000 hours during 2020. The number of expected hours over 5 years is 100,000.
-Refer to Falling Leaves Lawn Care. 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 $7,000
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, the total depreciation expense recognized will be the same under both the double-declining-balance method and the straight-line method. The difference lies in the timing of the depreciation expense, not the total amount depreciated over the asset's useful life.