Compatibility Services acquired an $80,000 machine on January 1,20X3.The machine is estimated to have a useful life of 8 years,and a residual value of $4,000.For units-of-production depreciation purposes,the machine is expected to produce 400,000 units.If Compatibility Services uses double-declining-balance depreciation,what is the depreciation expense in 20X4?
A)$ 19,000
B)$ 10,000
C)$15,000
D)$9,500
E)$16,000

Question

Quizplus · Accepted Answer

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

Depreciation rate = 1/8 years * 2 = 0.25

Then, we can calculate the depreciation expense for 20X4 based on the number of units produced:

Depreciation expense = (400,000 units * $80,000 cost - $4,000 residual value) * 0.25 = $15,000

Therefore, the correct answer is choice letter C, $15,000.

Compatibility Services Acquired an $80,000 Machine on January 1,20X3