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On April 30,2017,Tilton Products purchased machinery for $88,000.The useful life of this machinery is estimated at 8 years,with an $8,000 residual value.
-Assume that in its financial statements,Tilton Products uses the 200%-declining-balance method and the half-year convention.Depreciation expense in 2017 and 2018 will be:
A)$11,000 in 2017 and $19,250 in 2018.
B)$22,000 in 2017 and $12,571 in 2018.
C)$22,000 in 2017 and $7,857 in 2018.
D)$11,000 in 2017 and $22,000 in 2018.

Question

Quizplus · Accepted Answer

The 200%-declining-balance method doubles the straight-line rate. For an 8-year life, the straight-line rate is 12.5%, so the double rate is 25%. Using the half-year convention, 2017 depreciation is $88,000 * 25% * 0.5 = $11,000. For 2018, it's ($88,000 - $11,000) * 25% = $19,250.

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