Depreciation: Declining Balance Video Lessons

Concept

# Problem: On January 1, 2004, ABC Company purchased equipment for $100,000. The equipment was assigned a life of 20 years and a$4,000 residual value. On January 1, 2007, ABC Company spent $34,600 to overhaul the equipment. This capital expenditure caused ABC Company to change the life of the equipment from 20 years to 28 years with a residual value at the end of the 28 years of$2,000. Assuming ABC Company employs the double-declining balance depreciation method, calculate the book value of the equipment at December 31, 2008.

###### Problem Details

On January 1, 2004, ABC Company purchased equipment for $100,000. The equipment was assigned a life of 20 years and a$4,000 residual value. On January 1, 2007, ABC Company spent $34,600 to overhaul the equipment. This capital expenditure caused ABC Company to change the life of the equipment from 20 years to 28 years with a residual value at the end of the 28 years of$2,000.

Assuming ABC Company employs the double-declining balance depreciation method, calculate the book value of the equipment at December 31, 2008.