Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped depreciates its assets using the double-declining balance method.What is the accumulated depreciation for this asset on December 31, 2018?

Question

Quizplus · Accepted Answer

Using the double-declining balance method, the annual depreciation rate is calculated as twice the straight-line rate, which is (1/5) or 20%.

In the first year, the depreciation expense would be:

$44,000 x 20% = $8,800

So, the book value at the end of the first year would be:

$44,000 - $8,800 = $35,200

In the second year, the depreciation expense would be:

($44,000 - $8,800) x 20% = $6,640

So, the accumulated depreciation at the end of the second year would be:

$8,800 + $6,640 = $15,440

Therefore, the answer is B) $10,560 (accumulated depreciation for 2018 would be $15,440 - $8,880 = $10,560).