A machine is purchased on January 1,2018,for $90,000.It is expected to have a useful life of five years and a residual value of $5,000.The company closes its books on December 31.Under the double-declining balance method,what is the total amount of depreciation to be expensed during the 2019?
A)$21,600
B)$22,000
C)$22,400
D)$34,000

Question

Quizplus · Accepted Answer

Depreciation expense = Book value × (2 ÷ Useful life)
Depreciation expense = (Cost − Accumulated depreciation)× (2 ÷ Useful life)
2018:
= ($90,000 − $0)× 2 / 5 = $36,000
2019:
= ($90,000 − $36,000)× 2 / 5 = $21,600
Book value at end of 2019 = $90,000 − ($36,000 + $21,600)= $32,400
The book value at the end of 2019 is greater than the residual value of $5,000.As such,the amount calculated above is the amount of depreciation that can be taken.

A Machine Is Purchased on January 1,2018,for $90,000