Mohr Company purchases a machine at the beginning of the year at a cost of $26,000....
Mohr Company purchases a machine at the beginning of the year at a cost of $26,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $5,000 salvage value. Depreciation expense in year 2 is:
Multiple Choice
$15,600.
$10,400.
$8,400.
$6,240.
$5,200.
Homework Answers
Answer
- Correct Answer = Option #4: $ 6,240 = Depreciation expense for Year 2
- Working
|
A |
Cost |
$ 26,000.00 |
|
B |
Residual Value |
$ 5,000.00 |
|
C=A - B |
Depreciable base |
$ 21,000.00 |
|
D |
Life [in years] |
5 |
|
E=C/D |
Annual SLM depreciation |
$ 4,200.00 |
|
F=E/C |
SLM Rate |
20.00% |
|
G=F x 2 |
DDB Rate |
40.00% |
|
Year |
Beginning Book Value |
Depreciation rate |
Depreciation expense |
Ending Book Value |
|
1 |
$ 26,000.00 |
40.00% |
$ 10,400.00 |
$ 15,600.00 |
|
2 |
$ 15,600.00 |
40.00% |
$ 6,240.00 = Answer |
$ 9,360.00 |
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