Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the double-declining-balance method.
A)$16,900.
B)$16,000.
C)$17,400.
D)$18,379.
E)$20,880.

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%. Double that rate is 40%. First-year depreciation is 40% of $87,000 = $34,800. The book value at the start of the second year is $87,000 - $34,800 = $52,200. Second-year depreciation is 40% of $52,200 = $20,880.

Wickland Company Installs a Manufacturing Machine in Its Production Facility