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On January 1, 2015, Sundry Corp.purchased equipment for $55,000.It was expected to last 8 years, after which it will be sold for $3,000.It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours during the year ended December 31, 2015.
-The depreciation expense for 2015 using the double diminishing-balance method will be
A)$ 6,875.
B)$12,375.
C)$13,000.
D)$13,750.

Question

Use the following information for questions 
On January 1, 2015, Sundry Corp.purchased equipment for $55,000.It was expected to last 8 years, after which it will be sold for $3,000.It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours during the year ended December 31, 2015.
-The depreciation expense for 2015 using the double diminishing-balance method will be
A)$ 6,875.
B)$12,375.
C)$13,000.
D)$13,750.

Quizplus · Accepted Answer

The double diminishing-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/8 years = 12.5%. Double that is 25%. Depreciation for 2015 is 25% of $55,000, which equals $13,750.

Use the Following Information for Questions