Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.
-Using the double-declining balance method, depreciation for 2019 and book value at December 31, 2019, would be:
A) $10,000 and $5,000.
B) $10,000 and $10,000.
C) $11,250 and $6,250.
D) $11,250 and $11,250.

Question

Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. 
-Using the double-declining balance method, depreciation for 2019 and book value at December 31, 2019, would be:
A) $10,000 and $5,000.
B) $10,000 and $10,000.
C) $11,250 and $6,250.
D) $11,250 and $11,250.

Quizplus · Accepted Answer

Depreciation in 2019 = [$45,000 - (45,000 × 50%)] × 50% = $11,250
Book value, 12/31/2019 = $45,000 - 22,500 - 11,250 = $11,250

Archie Co Purchased a Framing Machine for $45,000 on January 1