The Antarctica Co. acquired a machine on January 1, 2016, at a cost of $60,000. The machine is expected to have a ten-year life and a residual value of $5,000. The estimated lifetime output from the machine is expected to be 55,000 units. Under which of the following depreciation methods would the depreciation charge be the greatest in 2016 if 9,100 units were produced during the year?

Question

Quizplus · Accepted Answer

The double-declining-balance method typically results in the highest depreciation expense in the early years of an asset's life compared to other methods like straight-line, units-of-output, and sum-of-the-years'-digits, because it applies a constant rate (twice the straight-line rate) to a decreasing book value each year.