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On January 1, 2012, Baker Corp purchased equipment for $55,000. It was expected to last 8 years, after which it will be sold for $3,000. It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours in 2012.
-The depreciation expense for 2012 using the double diminishing-balance method will be
A)$ 6,875.
B)$12,375.
C)$13,000.
D)$13,750.

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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 rate is 25%. Depreciation for 2012 is 25% of $55,000 = $13,750.

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