Using the double-declining balance method, the book value at December 31, 2010 would be:
A)$14,400.
B)$24,960.
C)$27,360.
D)$25,920.Book value, 12/31/10 = $72,000 28,800 17,280 = $25,920

Question

Quizplus · Accepted Answer

The double-declining balance method calculates depreciation at twice the rate of the straight-line method. To apply this method, the asset's net book value is multiplied by twice the straight-line depreciation rate. For this problem, the straight-line rate is 1/5 (since the asset has a useful life of 5 years), and twice that rate is 2/5. Thus, the depreciation expense for 2010 is $72,000 x 2/5 = $28,800. The book value at the end of 2010 is calculated by subtracting the accumulated depreciation from the original cost: $72,000 - $28,800 = $43,200. For 2011, the same calculation is used: ($43,200 - $28,800) x 2/5 = $17,280. The book value at the end of 2011 is calculated by subtracting the accumulated depreciation for both years ($28,800 + $17,280) from the original cost: $72,000 - ($28,800 + $17,280) = $25,920. Therefore, the answer is D.

Using the Double-Declining Balance Method, the Book Value at December