On 31 December 2013, a new machine with a useful life of 6 years and an estimated residual value of zero was purchased by a business at a cost of $30,000. The amount of depreciation expense charged for the year ended 31st December 2015, using the reducing balance method at a rate of 30% per annum, is:
A) $6,300
B) $9,000
C) $5,000
D) $1,800

Question

Quizplus · Accepted Answer

The depreciation for the year ended 31st December 2015 is calculated using the reducing balance method at a rate of 30% per annum. For the first year (2014), the depreciation is 30% of $30,000, which is $9,000, leaving a book value of $21,000. For the second year (2015), the depreciation is 30% of $21,000, which is $6,300.

On 31 December 2013, a New Machine with a Useful