Question

Mohr Company purchases a machine at the beginning of the year at a cost of $42,000. The machine is depreciated using the double- declining balance method. The machine's useful life is estimated to be 8 years with a $9,000 salvage value. Depreciation expense in year 2

Answer 1

Double Declining Method Depreciation Rate = 2 x (100% / useful life) = 2 x (100 % / 8)= 25% Years Beginning Book Value Depreciation Exp Ending Book Value Year 1 Year 2 42,000 31,500 $ $ 10,500 $ 7,875 $ 31,500 23,625 Year 1 Year 2 Depreciation Expense = Beginning Book value x Depreciation Rate 42000 x 25% = 10500 31500 x 25% = 7875 Ending Book Value = Beginning book value - Depreciation Expense