Anew piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of
five years. assuming twice the straight-line rate, the book value at the end of year 2 using the decliningbalance
method is

What is the "straight line rate?"  To obtain this, subtract the $600 residual value from the "new cost," $18,000.  Result:  $17,400.

The straight line rate would then be $17,400/5, or $3,480; twice that would be $6,960.  

After one year, the book value at the end of year 1 would be $18,000-$6,960 = $11,040.

Follow a similar process to find the book value at the end of year 2.  Twice the original depreciation at this point would be $6,960, as before.  Subtracting this from $11,040 results in a book value at the end of year 2 of $11,040-$6,960= $4,080.

There may be other interpretations dictating what to do here.  I'd suggest you look up "declining balance method" and compare it to what we have done here. 

The answer is why would a teacher ask that