Rexford Company purchased a machine on January 1, 2012, for $57,600 cash. The machine has an estimated useful life of 8 years and a salvage value of $15,040. Rexford uses the double-declining-balance method of depreciation for all its assets. What will be the depreciation expense for 2012?

Question

Quizplus · Accepted Answer

The double-declining-balance depreciation rate is (100%/useful life) x 2. 
So the depreciation rate for this asset is (100%/8) x 2 = 25%. 
The depreciation expense for the first year can be calculated as:
Cost of asset - salvage value x depreciation rate for one year
= ($57,600 - $15,040) x 25%
= $42,560 x 25%
= $10,640
Therefore, the answer is (C) $10,640.

Rexford Company Purchased a Machine on January 1, 2012, for $57,600