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.What is the balance in the accumulated depreciation account on December 31,2010,if Machiel Manufacturing uses double-declining-balance depreciation?

Question

Quizplus · Accepted Answer

Double-declining-balance depreciation is calculated by taking the straight-line depreciation rate (1/4 for a useful life of 4 years) and doubling it (2/4) to get the annual depreciation rate of 50%.

In 2009, the depreciation expense would be:

($60,000 - $10,000) x 50% x (0/500,000) = $0

In 2010, the depreciation expense would be:

($60,000 - $0 - $10,000) x 50% x (500,000/500,000) = $25,000

The accumulated depreciation account is a contra asset account that is credited for the amount of depreciation expense each year.

At the end of 2010, the accumulated depreciation balance would be $0 + $25,000 = $25,000.

Therefore, the correct answer is (D) $45,000.

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