Question

A machine is purchased on January 1, 2018, for $90,000. It is expected to have a useful life of five years and a residual value of $5,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2019? Multiple Choice $22,000 $34,000 $21,600 $22,400

Answer 1

$21,600

Step-by-step explanation:

The computation of the total amount of depreciation to be expense is shown below:

First, we have to find the depreciation rate which is shown below:

= One ÷ useful life

= 1 ÷ 5

= 20%

Now the rate is double So, 40%

In year 1, the original cost is $90,000, so the depreciation is $36,000 after applying the 50% depreciation rate

And, in year 2, the $(90,000 - $36,000) × 40% = $21,600

Residual value is ignored in this method.