Question

Solar Products purchased a machine for $39,000 on July 1, 2012. The company intends to depreciate it over 4 years using the double-declining balance method. Salvage value is $3,000.

Depreciation for 2013 is :
a. $19,500b. $9,750c. $14,625d. $9,000

Answer 1

Option (c) is correct.

Step-by-step explanation:

Given that,

Cost of machine = $39,000

Depreciation years = 4

Salvage value = $3,000

Straight line rate:

= (100 ÷ 4)%

= 25%

Double declining rate:

= (2 × Straight line rate)

= (2 × 25)%

= 50%

Depreciation for year 2012:

= Cost of machine × Double declining rate × Time period

= $39,000 × 50% × 6/12

= $9,750

Depreciation for 2013:

= (cost of machine - Depreciation for year 2012) × Double declining rate

= (39,000 - $9,750) × 50%

= $14,625