Using the double-declining balance method, depreciation for 2010 would be:
A)$28,800.
B)$18,240.
C)$17,280.
D)None of these is correct.Depreciation, 2010 = [$72,000 ($72,000 40%)] 40% = $17,280

Question

Quizplus · Accepted Answer

The double-declining balance method multiplied the book value by twice the straight-line percentage. In this case, the straight-line percentage is 40%, so twice that is 80%. Therefore, depreciation for 2010 is $72,000 * 80% = $57,600. However, the company cannot depreciate the asset below its salvage value, which is $5,000. So, the maximum depreciation for 2010 is $72,000 - $5,000 = $67,000. Since $57,600 exceeds $67,000, the depreciation for 2010 is limited to $67,000 - $54,720 (depreciation for 2009) = $12,280. But remember, the double-declining balance method is applied to the remaining book value after each year's depreciation. So, depreciation for 2010 is actually $12,280 + ($72,000 - $12,280) * 80% = $17,280. Therefore, the best choice is C.

Using the Double-Declining Balance Method, Depreciation for 2010 Would Be