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Maryam Co.purchased a machine on January 1,2020 for $22,500.The machine had an estimated useful life of 10 years and an estimated residual value of $2,500.The company uses double-declining-balance depreciation.
-What will be the depreciation expense for 2020?
A)$4,500
B)$3,500
C)$2,250
D)$2,000

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Quizplus · Accepted Answer

The double-declining-balance depreciation rate is 2/(useful life of the asset), which is 2/10 or 20% per year. The depreciation expense for the first year is calculated on the initial cost of the machine, which is $22,500. Therefore, the depreciation expense for 2020 is 20% of $22,500, which equals $4,500.

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