Use the information below to answer the following questions:
Creep Ltd purchased a machine for $100 000 on 1 January 2010. It has an estimated useful life of 5 years. Creep Ltd’s financial period ends on 31 December. The machine was depreciated using the reducing balance method at 60%.
-What was the depreciation expense for year ended 31 December 2011?
A) $60 000
B) $24 000
C) $9600
D) $40 000.

Question

Quizplus · Accepted Answer

Depreciation rate using reducing balance = 60%
Depreciation for year ended 31 December 2010 = 100,000 x 60% = $60,000
Depreciation for year ended 31 December 2011 = (100,000 - 60,000) x 60% = $24,000 (as the depreciation is calculated on a reducing balance basis)

Use the Information Below to Answer the Following Questions