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 machine's book value as of December 31, 2013?

Question

Quizplus · Accepted Answer

The double declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/8 = 12.5%, so the double rate is 25%. For 2012, depreciation is $57,600 * 25% = $14,400. Book value at end of 2012 is $57,600 - $14,400 = $43,200. For 2013, depreciation is $43,200 * 25% = $10,800. Book value at end of 2013 is $43,200 - $10,800 = $32,400.

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