On May 5, Year 1, Lloyd purchased a machine for $84,000. The estimated life of the machine was 10 years, with an estimated residual value of $10,000. The service life in terms of "output" is estimated at 8,000 hours of operation.
-Refer to the data above. Assume Lloyd uses 200%-declining-balance depreciation with the half-year convention. Depreciation expense to be recognized in Year 2 (the second year of ownership) is:

Question

Quizplus · Accepted Answer

In the first year, using the 200%-declining-balance method with a half-year convention, the depreciation is calculated as: (2/10) * $84,000 * 0.5 = $8,400. In the second year, the book value is $84,000 - $8,400 = $75,600. The depreciation for the second year is (2/10) * $75,600 = $15,120.

On May 5, Year 1, Lloyd Purchased a Machine for $84,000