Exhibit 11-2 Bryan purchased a business computer for $4, 500 on August 3, 2010.It has an estimated residual value of $500 and an expected service life of five years.Bryan uses double-declining-balance depreciation computed to the nearest whole month.
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Refer to Exhibit 11-2.The accumulated depreciation balance at December 31, 2011, should be
A)$1, 750
B)$2, 000
C)$2, 250
D)$2, 340

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so the double rate is 40%. For 2010, depreciation is $4,500 * 40% * (5/12) = $750. For 2011, depreciation is ($4,500 - $750) * 40% = $1,500. Total accumulated depreciation by December 31, 2011, is $750 + $1,500 = $2,250.

Exhibit 11-2 Bryan Purchased a Business Computer for $4, 500