Stanley Company purchased a machine that was installed and placed in service on January 2,2013,at a total cost of $680,000.Residual value was estimated at $70,000.The machine is being depreciated over ten years by the double-declining-balance method.For the year 2014,Stanley should record depreciation expense of
A) $108,800
B) $97,600
C) $68,000
D) $61,000

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 10% (1/10 years), so the double rate is 20%. For 2013, depreciation is 20% of $680,000 = $136,000. The book value at the start of 2014 is $680,000 - $136,000 = $544,000. For 2014, depreciation is 20% of $544,000 = $108,800.

Stanley Company Purchased a Machine That Was Installed and Placed