Ramos Co. purchased machinery that was installed and ready for use on January 3, 2014, at a total cost of $115,000. Salvage value was estimated at $15,000. The machinery will be depreciated over five years using the double-declining balance method. For the year 2015, Ramos should record depreciation expense on this machinery of

Question

Quizplus · Accepted Answer

First, we need to calculate the annual depreciation rate using the double-declining balance method:

Annual Depreciation Rate = (100% / Useful life) x 2
Annual Depreciation Rate = (100% / 5 years) x 2
Annual Depreciation Rate = 40%

Then, we can calculate the depreciation expense for the year 2015:

Depreciation Expense = Book Value at Beginning of the Year x Annual Depreciation Rate
Book Value at Beginning of the Year = Cost - Accumulated Depreciation
Book Value at Beginning of the Year = $115,000 - $46,000 (depreciation expense for 2014)
Book Value at Beginning of the Year = $69,000

Depreciation Expense = $69,000 x 40%
Depreciation Expense = $27,600

Therefore, Ramos should record depreciation expense on this machinery of $27,600 for the year 2015.

Ramos Co Purchased Machinery That Was Installed and Ready for Use