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Cutter Enterprises purchased equipment for $72,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $6,000. Using the double-declining-balance method, depreciation for 2024 and the book value on December 31, 2024, would be: Multiple Choice $26,400 and $45,600, respectively. $26,400 and $39,600, respectively. $28,800 and $43,200, respectively. $28,800 and $37,200, respectively.
Cutter Enterprises purchased equipment for $72,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $6,000. Using the double-declining-balance method, depreciation for 2024 and the book value on December 31, 2024, would be: Multiple Choice $26,400 and $45,600, respectively. $26,400 and $39,600, respectively. $28,800 and $43,200, respectively. $28,800 and $37,200, respectively.
Final answer:Using the double-declining-balance method of depreciation, the depreciation for 2024 for the Cutter Enterprises' equipment would be $28,800. This leaves a book value of $43,200 at the end of the year.Explanation:Thedouble-declining-balancemethod is a form of accelerated depreciation. It ends up in higher depreciation expense in the earlier years of an asset's life. For Cutter Enterprises, the equipment purchased for $72,000 has a useful life of 5 years. The residual value is not considered while calculating depreciation in double-declining-balance method. The rate for this method is 2/5 = 40%.The first year's depreciation is 40% of $72,000, which is $28,800. So, the book value, or carrying amount, on December 31, 2024, would be the initial cost of $72,000 minus the first year's depreciation of $28,800, leaving $43,200. Hence, the depreciation for 2024 is $28,800 and the book value on December 31, 2024, is $43,200.Learn more about Double-declining-balance depreciation here:brainly.com/question/30751480#SPJ11...