Machinery was purchased on January 1, 2010 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining balance depreciation for 2011 would be
A) $10,929
B) $6,000
C) $10,500
D) $10,408

Question

Quizplus · Accepted Answer

To calculate Double-declining balance depreciation, first we need to find the straight-line depreciation rate:
Straight-line depreciation rate = (Cost - Salvage value) / Estimated life
Straight-line depreciation rate = ($51,000 - $9,000) / 7 years = $6,000

Using the double-declining balance method, we double the straight-line depreciation rate, which gives us $12,000 for the first year. To calculate the depreciation for the second year, we start with the book value (cost - accumulated depreciation), which is $39,000 after the first year of depreciation.

Year 1 depreciation = $12,000
Year 2 book value = $39,000
Year 2 depreciation = $39,000 x 2 / 7 = $11,143 (rounded to nearest dollar)

Therefore, the answer is D) $10,408 (rounded to nearest dollar), which is the amount of depreciation for 2011.

Machinery Was Purchased on January 1, 2010 for $51,000