Question

Jackie Products purchased a machine for $90,000 on July 1, 2017. The company intends to depreciate...

Jackie Products purchased a machine for $90,000 on July 1, 2017. The company intends to depreciate it over 8 years using the double-declining balance method. Salvage value is $10,000. Depreciation for 2017 is

a.

$8,125

b.

$16,125

c.

$11,250

d.

$22,500

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Answer #1
Correct Answer:Option C - 11250
Working Notes:
Beginning book value 90000
salvage value 10000
net value 80000
useful life (years) 8
Regular Depreciation rate 12.5%
depreciation rate = 1/useful life*100
= 1/8*100
= 12.5 %
Double - declining balance formula = 2*cost of the asset *depreciation rate
Here ,it will be 2*12.5% = 0.25
= 25%
Depreciation for 2017
Beginning book value 90000
Depreciation expenses 11250 (90000*25%*6/12)
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