Machiel Manufacturing acquired a $60,000 machine on January 1,2009.The machine is estimated to have a useful life of 4 years,and a residual value of $10,000.For units-of-production depreciation purposes,the machine is expected to produce 500,000 units.If Machiel Manufacturing uses double-declining-balance depreciation,what is the depreciation expense in 2010?
A)$ 8,640
B)$ 9,600
C)$12,500
D)$15,000
E)$25,000

Question

Quizplus · Accepted Answer

The double-declining-balance depreciation rate is 2 times the straight-line rate. For a useful life of 4 years, the straight-line rate is 1/4 or 25%. Therefore, the double-declining rate is 50%. The depreciation expense for the first year (2009) on a $60,000 machine with a $10,000 residual value is calculated on the book value at the beginning of the year. However, for 2010, we need to calculate the depreciation on the remaining book value after the first year's depreciation.1. Initial cost: $60,0002. Residual value: $10,0003. Depreciable base: $60,000 - $10,000 = $50,0004. Year 1 depreciation: 50% of $50,000 = $25,0005. Book value at the beginning of 2010: $60,000 - $25,000 = $35,000For 2010, the depreciation expense is 50% of the book value at the beginning of 2010 ($35,000), which is $17,500. However, this option is not provided, indicating a mistake in my calculation or in the interpretation of the question. Given the options, none directly match the expected calculation for double-declining-balance depreciation for 2010 based on the provided information and standard calculation methods. A reevaluation of the calculation process or provided options may be necessary. Upon reevaluation, it's clear there was an error in my explanation regarding the calculation for the year 2010, specifically not accounting correctly for the depreciation method and the provided options. The correct approach involves recognizing the depreciation expense for the first year and then applying the double-declining rate to the new book value for the second year, but the calculation provided does not align with the options given, suggesting a misunderstanding of the method or a misstep in the calculation process. Given the options and the typical process for calculating double-declining-balance depreciation, none of the values directly match the expected outcome of such a calculation for the year 2010, pointing towards a need to correct the explanation or clarify the calculation steps based on the double-declining balance method.

Machiel Manufacturing Acquired a $60,000 Machine on January 1,2009