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A new piece of equipment costs 18,000 with a residential value of 600. assuming twice the straight line rate

1 Answer

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Final answer:

The question is about calculating the depreciation of an equipment costing $18,000 using a double-declining balance method. Without the useful life span, a precise answer is not possible, but the method involves depreciating at twice the straight-line rate, without going below the residual value of $600.

Step-by-step explanation:

The student's question pertains to the calculation of depreciation using the declining balance method, specifically a double-declining rate applied to a new piece of equipment that costs $18,000 with a residual value of $600. In the declining balance method, you depreciate the asset at twice the straight-line rate.

However, since the question does not provide a useful life period to calculate the straight-line depreciation percentage, we cannot give a precise answer to this. Generally, if we assume a hypothetical useful life of 'n' years, the straight-line depreciation rate would be 1/n per year. Consequently, the double-declining rate would be 2/n, applied to the book value at the beginning of each year, not dipping below the residual value of $600.

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User Daniel Thompson
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