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Maddie Co.purchased a machine on January 1, 2011 for $22,500.The machine had an estimated useful life of 10 years and an estimated residual value of $2,500.The company uses double-declining-balance amortization.
-What will be the amortization expense for 2011?
A)$4,500
B)$3,500
C)$2,250
D)$2,000

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line depreciation rate. The straight-line depreciation rate is 1/10 (10 years) = 10%. Doubling this gives a rate of 20% per year. The depreciation expense for the first year is 20% of $22,500, which is $4,500.

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