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# Depreciation : Straight-Line, Double-Declining Balance..etc

Cutter Enterprises purchased equipment for \$72,000 on January 1, 2006. The equipment is expected to have a five-year life, with a residual value of \$6,000 at the end of five years.

1. Using the straight-line method, depreciation expense for 2006 would be:
A) \$13,200
B) \$14,400
C) \$72,000
D) None of the above is correct.

2. Using the straight-line method, depreciation expense for 2007 and the equipment book value at December 31, 2007 would be:
A) \$14,400 and \$43,200.
B) \$28,800 and \$37,200.
C) \$13,200 and \$39,600.
D) \$13,200 and \$45,600.

3. Using the double-declining balance method, depreciation expense for 2006 and the book value at December 31, 2006 would be:
A) \$26,400 and \$45,600.
B) \$28,800 and \$43,200.
C) \$28,800 and \$37,200.
D) \$26,400 and \$36,600.

4. Using the sum-of-the-years'-digits method, depreciation expense for 2006 and book value at December 31, 2006 would be:
A) \$22,000 and \$44,000.
B) \$22,000 and \$50,000.
C) \$24,000 and \$48,000.
D) \$24,000 and \$42,000.

#### Solution Preview

Cutter Enterprises purchased equipment for \$72,000 on January 1, 2006. The equipment is expected to have a five-year life, with a residual value of \$6,000 at the end of five years.

1. Using the straight-line method, depreciation expense for 2006 would be:
A) \$13,200
B) \$14,400
C) \$72,000
D) None of the above is correct.

Annual Dep = purchase price - ending price / useful life

= 72000 - 6000 / 5
= \$13,200 (option A)

2. Using the ...

#### Solution Summary

Solution for depreciation using Straight-Line, Double-Declining Balance and Sum-of-Years' Digits

\$2.19