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.What is the balance in the accumulated depreciation account on December 31,20X5,if Compatibility Services uses double-declining-balance depreciation?
A)$11,250
B)$15,000
C)$20,000
D)$46,250
E)$15,312

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation rate:
Double-declining balance rate = (1/8) x 2 = 0.25 or 25%

Then, we can calculate the depreciation expense for 20X3, 20X4, and 20X5:
20X3: $80,000 x 25% = $20,000
20X4: ($80,000 - $20,000) x 25% = $15,000
20X5: ($80,000 - $20,000 - $15,000) x 25% = $11,250

Therefore, the total accumulated depreciation for 20X5 is:
$20,000 + $15,000 + $11,250 = $46,250, which is option D.

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