On January 1, 2022, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000.Using the double diminishing-balance method, the depreciation expense for the year ending December 31, 2023 would be
A)$10,000.
B)$ 9,000.
C)$ 6,000.
D)$ 5,400.

Question

Quizplus · Accepted Answer

The double declining balance method accelerates depreciation. The annual depreciation rate is double the straight-line rate. For a 5-year useful life, the straight-line rate is 20% (100% / 5 years), so the double declining rate is 40%. Year 1 depreciation: $25,000 * 40% = $10,000. End of Year 1 book value: $25,000 - $10,000 = $15,000. Year 2 depreciation: $15,000 * 40% = $6,000.

On January 1, 2022, a Machine with a Useful Life