Sonic Corporation purchased an Automated Robotic Equipment system on October 1,

Question

Sonic Corporation purchased an Automated Robotic Equipment system on October 1, 2016. The purchase cost of the asset was $110,000. The equipment has an estimated residual value of $15,000 and an estimated useful life of four years or 50,000 hours. Assume the equipment was used for 5,000 hours for the year ending December 31, 2016. The company has adopted the double-declining balance method to compute depreciation expense. The hours for the remaining years are as follows: Year 2017 2018 2019 2020 Hours/Year 16,000 12,000 10,000 When computing Depreciation Expense do not round-up or round-down the answor Double-Declining Balance Method. Drop the cents regardless for each year and each part. Compute Depreciation expense for the year ending December 31, 2016 for Double-Declining Balance.

Explanation / Answer

double declining rate 1/4*2 0.5 depreciation expense = 110,000*50%*3/12 13750 answer $ 13,750

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