On January 1, Year 1, Phillips Company Made a Basket

On January 1, Year 1, Phillips Company made a basket purchase including land, a building and equipment for $380,000. The appraised values of the assets are $20,000 for the land, $340,000 for the building and $40,000 for equipment. Phillips uses the double-declining-balance method of depreciation for the equipment which is estimated to have a useful life of four years and a salvage value of $5,000. The depreciation expense for Year 1 for the equipment is:

A) $17,000.
B) $20,000.
C) $9,500.
D) $19,000.

Correct Answer:

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