Matile Co.purchased machinery that was installed and ready for use on January 3, 2010, at a total cost of $69,000.Residual value was estimated at $9,000.The machinery will be depreciated over five years using the double-declining balance method.For the year 2011, Matile should record depreciation expense on this machinery of

Question

Quizplus · Accepted Answer

To calculate the annual depreciation expense using the double-declining balance method, we need to first calculate the straight-line depreciation rate and then multiply it by 2 to get the double-declining balance rate.

Straight-line depreciation rate = (cost - salvage value) / useful life
= ($69,000 - $9,000) / 5 years
= $12,000 per year

Double-declining balance rate = straight-line rate x 2
= $12,000 x 2
= $24,000 per year

Note that in the first year, we apply the double-declining balance rate to the full cost of the asset. In subsequent years, we apply the rate only to the net book value (cost - accumulated depreciation).

Depreciation expense for 2011 = double-declining balance rate x net book value at the beginning of the year

Net book value at the beginning of the year = cost - accumulated depreciation in 2010
= $69,000 - $24,000
= $45,000

Depreciation expense for 2011 = $24,000 x $45,000 / $69,000
= $16,560

Therefore, the correct answer is B) $16,560.

Matile Copurchased Machinery That Was Installed and Ready for Use on on January