Voltage industries, a calendar-year company, purchases equipment for $85,000 on january 2nd, 2017. the equipment's expected useful life is five years, and the expected salvage value of the equipment is $5,000. what is the book value of the equipment on december 31st, 2018, if voltage uses the double-declining-balance method?

a.$34,000

b.$51,000

c.$54,400

d.$30,600

Double-declining-balance rate:

By straight-line method, annual depreciation expenses = (85,000-5,000) / 5 = $16,000

Rate of depreciation = 16000 / (85,000-5,000) = 0.2 = 20%

Then, double-declining-balance rate = 2*Straight-line rate = 2*20 = 40%

From 2nd January 2017 to 31st December 2018 can be approximated as 1 year.

Therefore,

Depreciation expense in yr 1 = 40/100 * 85,000 = $34,000

And,

Book value at December 31 2018 = $85,000 - $34,000 = $51,000

It can be seen that the correct answer is b.