Piazza Co. purchased a machine on July 1, 2014, for $800,000. The machine has an estimated useful life of five years and a salvage value of $160,000. The machine is being depreciated from the date of acquisition by the 150% declining-balance method. For the year ended December 31, 2014, Piazza should record depreciation expense on this machine of

Question

Quizplus · Accepted Answer

The 150% declining balance method means using 150% of the straight-line rate. The straight-line rate for a 5-year life is 20% (100% / 5 years). Therefore, the 150% declining balance rate is 30% (150% of 20%). For the first half-year (July 1 to December 31, 2014), the depreciation expense is 30% of $800,000, prorated for 6 months: $800,000 * 30% * 0.5 = $120,000.

Piazza Co Purchased a Machine on July 1, 2014, for $800,000