Harley Davis Inc. started its unicycle manufacturing business in 2007 and acquired $600,000 of equipment at the beginning of 2007. It decided to use the double-declining balance (DDB) depreciation on its equipment with no residual value and a 10-year useful life. In 2009 it changed to the straight-line depreciation method. Depreciation computed for 2007-8 is presented below: In 2009, Harley Davis would report depreciation of:

Question

Quizplus · Accepted Answer

The double-declining balance method was used for 2007 and 2008, resulting in a book value of $360,000 at the end of 2008. Switching to straight-line depreciation in 2009 with 8 years remaining, the annual depreciation is $360,000 / 8 = $45,000.