On April 1, 2015, Chickadee Corp.purchased new machinery for $400,000.The machinery has an estimated useful life of ten years, a residual value of $20,000, and depreciation is calculated using the double declining-balance method.Chickadee's year end is December 31.The accumulated depreciation on this machinery at March 31, 2017, should be
A)$102,500.
B)$131,200.
C)$141,600.
D)$182,400.

Question

Quizplus · Accepted Answer

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

Depreciation rate = 2 / 10 = 0.2

For the first year (2015), the depreciation expense would be:

Depreciation expense = $400,000 x 0.2 = $80,000

So, the carrying amount of the asset at December 31, 2015 would be:

Carrying amount = $400,000 - $80,000 = $320,000

For the second year (2016), the depreciation expense would be:

Depreciation expense = $320,000 x 0.2 = $64,000

So, the carrying amount of the asset at December 31, 2016 would be:

Carrying amount = $320,000 - $64,000 = $256,000

Therefore, the accumulated depreciation at March 31, 2017 would be:

Accumulated depreciation = $400,000 - $256,000 - $20,000 = $124,000

However, the question asks for the accumulated depreciation at the end of the year (December 31, 2017). Since we already calculated the accumulated depreciation up to the end of 2016, we just need to add the depreciation expense for 2017:

Depreciation expense = $256,000 x 0.2 = $51,200

Accumulated depreciation at December 31, 2017 = $124,000 + $51,200 = $175,200

However, the question specifically asks for the accumulated depreciation as of March 31, 2017. Since we know that the depreciation expense for 2017 would be $51,200, we can calculate the accumulated depreciation as of March 31, 2017 as follows:

Accumulated depreciation at March 31, 2017 = $80,000 + $64,000 + ($51,200 / 12) = $141,600

Therefore, the answer is choice C, $141,600.