On January 2, 2010, Carter Manufacturing Co. purchased a machine for $270,000. The estimated useful life of the machine is 10 years or 250,000 MHs. The machine has an estimated $20,000 salvage value. Actual usage for the first year was 31,250 MHs. Which of the following will result in the highest depreciation for the first year?

Question

Quizplus · Accepted Answer

The double-declining balance method will result in the highest depreciation for the first year because it applies a constant rate to the depreciable base (cost minus accumulated depreciation), which decreases each year, making the first year's depreciation the highest.