Machinery was purchased on January 1 for $51,000.The machinery has an estimated life of 7 years and an estimated salvage value of $9,000.Double-declining-balance depreciation for the second year would be round calculations to the nearest dollar:
A)$6,000
B)$10,500
C)$10,929
D)$10,408

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/7, so the double rate is 2/7. First-year depreciation is $51,000 * 2/7 = $14,571. The book value at the start of the second year is $51,000 - $14,571 = $36,429. Second-year depreciation is $36,429 * 2/7 = $10,408.

Machinery Was Purchased on January 1 for $51,000