Question

On January 1, 2013, Zane Manufacturing Company purchased a machine for $40,000. The company expects to use the machine a total of 24,000 hours over the next 6 years. The estimated sales price of the machine at the end of 6 years is $4,000. The company used the machine 8,000 hours in 2013 and 12,000 in 2014. What is depreciation expense for 2014 if the company uses double-declining-balance depreciation? A) $13,333 B) $8,889 C) $6,000 D) $10,000

Answer 1

Answer is B) $8,889

Double-declining-balance

Depreciation rate = 100 / estimated life x 2

= 100/ 6 x 2

= 33.33%

Double-declining-balance
year	cost price	depreciation expense	accumulated depreciation	book value
2013	40,000	13,332 (40,000 x 33.33%)	13332	26,668
2014	40,000	8,888.44 (26,668 x 33.33%)	22,220	17,780