A machine has a cost of $24,000, a residual value of $6,000, and an estimated three-year life. If depreciation in the second year was $2,000, which depreciation method was used?
A) straight-line
B) double declining-balance
C) units of production
D) cannot tell from information given

Question

Quizplus · Accepted Answer

The double declining-balance method results in a constant depreciation expense over the asset's life, regardless of the asset's salvage value. In this case, the depreciation expense in the second year is $2,000, which is equal to 2/3 of the depreciation expense in the first year. This is consistent with the double declining-balance method, which uses a depreciation rate that is twice the straight-line depreciation rate.

A Machine Has a Cost of $24,000, a Residual Value