Question

A machine with a cost of $55,000 has an estimated residual value of $4,085 and an estimated life of 5 years or 19,287 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

a.$11,000

b.$13,200

c.$20,366

d.$22,000

Answer 1

1) Machine Cost - $ 55,000 (-) Residual Value $ 4,085 = Residual Cost $ 50,915

2) Depreciation per year =   Residual Cost   

Estimated Life

   =   $ 50,915

05

=     $ 10,183

3) Depreciation For second full year using Double declining balance method :-

a) Depreciation per year * No. of years = $ 10,183 * 2 = $ 20,366

4) Depreciation amount is $ 20,366