A machine is purchased on January 1, 2016, for $114,000. It is expected to have
ID: 2564220 • Letter: A
Question
A machine is purchased on January 1, 2016, for $114,000. It is expected to have a useful life of five years and a residual value of $17,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2017?
$27,360
$45,600
$68,400
$51,000
A machine is purchased on January 1, 2016, for $114,000. It is expected to have a useful life of five years and a residual value of $17,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2017?
Explanation / Answer
Depreciarion rate = 1/useful life * 200%
= 1/5 * 200%
= 40%
Depreciation = Begining book value * Depreciation rate
Year 1 (2016) depreciation = $114,000 * 40% = $45,600
Book Value at the begining of Year 2 = $114,000 - $45,600 = $68,400
Year 2 (2017) depreciation = $68,400 * 40% = $27,360
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