Question

You purchased a molding machine at a cost of $88,000. It has an estimated useful life of 12 years with a salvage value of $8,000. What is the 10 year depreciation for this machine computed by the double declining balance method?

A-$6,667

B-$4,012

C-$8,488

D-$3,411

Answer 1

Solution:-

Depreciation rate = 100/12 * 2

= 8.3333 * 2

= 16.667%

Year	Depreciation expense	Accumlated dep	Book value
1	88000 * 16.667% = 14,667	14,667	73,333
2	73,333 * 16.667% = 12,222	26,889	61,111
3	61,111 * 16.667% = 10,185	37,074	50,926
4	50,926 * 16.667% = 8,488	45,562	42,438
5	42,438 * 16.667% = 7,073	52,635	35,365
6	35,365 * 16.667% = 5,894	58,529	29,471
7	29,471 * 16.667% = 4,912	63,441	24,559
8	24,559 * 16.667% = 4,093	67,534	20,466
9	20,466 * 16.667% = 3,411	70,945	17,055
10	17,055 * 16.667% = 2,843	73,788	14,212

So answer is 2843