Jefferson Company purchased equipment on January 1, 2017. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the equipment for 2018 under the double-declining-balance method?

$11250

Explanation:

Based on the information given in the question, the depreciation expense for the equipment for 2018 under the double-declining-balance method will be calculated thus:

Cost of Equipment = $60,000

Salvage Value = $8,000

Useful Life = 8 years

Double-declining-balance Depreciation Rate will be calculated as:

= 2 / Useful Life

= 2 / 8

= 25%

For 2017:

Beginning Book Value = $60,000

Depreciation Expense = 25% × $60,000 = $15,000

Ending Book Value = $60,000 - $15,000 = $45,000

2018:

Beginning Book Value = $45,000

Depreciation Expense = 25% × $45,000 = $11,250

Therefore, the depreciation expense for the equipment for 2018 under the double-declining-balance method is $11250.

Note that:

Ending Book Value = Beginning Book Value - Depreciation Expense

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