A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours.What is the amount of depreciation for the second full year,using the double-declining-balance method?
A)$17,500
B)$18,750
C)$37,500
D)$16,667

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/4 (25%) since the machine's life is 4 years. Double that rate to get 50%. The first year's depreciation is 50% of $75,000, which is $37,500. The second year's depreciation is 50% of the remaining book value ($75,000 - $37,500 = $37,500), which is $18,750.

A Machine with a Cost of $75,000 Has an Estimated