A machine is purchased on January 1,2014,for $90,000.It is expected to have a useful life of five years and a residual value of $5,000.The company closes its books on December 31.Under the double-declining balance method,what is the total amount of depreciation to be expensed during the 2015 fiscal year (year 2 of 5)?
A)$21,600
B)$22,000
C)$22,400
D)$34,000

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-declining rate is 40%. For 2014, depreciation is 40% of $90,000 = $36,000. The book value at the start of 2015 is $90,000 - $36,000 = $54,000. Depreciation for 2015 is 40% of $54,000 = $21,600.

A Machine Is Purchased on January 1,2014,for $90,000