Fantasy Cruise Lines On January 1,2012,the company purchased a ship for $1,000,000.It has a ten-year useful life and a residual value of $100,000.The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines.What is the depreciation expense for the year ended December 31,2013?

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation rate, which is 2/10 = 0.2 or 20%. Then, we calculate the depreciation expense for 2012:
Depreciation expense for 2012 = $1,000,000 x 20% = $200,000
For 2013, we need to calculate the book value at the beginning of the year:
Book value at the beginning of 2013 = $1,000,000 - $200,000 = $800,000
Depreciation expense for 2013 = $800,000 x 20% = $160,000
Therefore, the correct answer is C, $160,000.

Fantasy Cruise Lines on January 1,2012,the Company Purchased a Ship