On January 1, 2015, Dunlop Company purchased a copy machine. The machine costs $600,000, its estimated useful life is 8 years, and its expected salvage value is $40,000.
What is the depreciation expense for 2016 using double-declining-balance method?
A) $ 95,000
B) $150,000
C) $112,500
D) $ 70,000

Question

Quizplus · Accepted Answer

Double-declining-balance rate = 1/8 × 2 = 25%.
Depreciation expense of year 2015 is $600,000 × 25% = $150,000
Depreciation expense of year 2016 is $450,000 × 25% = $112,500

On January 1, 2015, Dunlop Company Purchased a Copy Machine