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On January 1, 2018, Anvil Corp. purchased equipment for $60,000. It was expected to last 5 years, after which it will be sold for $5,000. It is expected to be used for a total of 10,000 machine hours, and was used for 750 hours during the year ended December 31, 2018.
-The depreciation expense for 2018 using the double diminishing-balance method will be
A) $11,000.
B) $12,250.
C) $12,000.
D) $24,000.

Question

Quizplus · Accepted Answer

The double diminishing-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so the double rate is 40%. Depreciation for 2018 is 40% of $60,000, which is $24,000.

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