Question

Marigold Corp. purchased a machine for $66100 on July 1, 2020. The company intends to depreciate it over 8 years using the double-declining balance method. Salvage value is $4800. Depreciation for 2020 to the closest dollar is

Answer 1

$8,263

Step-by-step explanation:

Annual depreciation is calculated as ;

Depreciation Expense = 2 x SLDP x BVSLDP

where,

SLDP = 100 / 8 = 12.50%

therefore,

Depreciation Expense = 2 x 12.50% x $66100 = $16,525

but,

the machine was only used for 6 months through the year in 2020 (bought 1 July).

therefore

Depreciation for 2020 = 6/12 x $16,525 = $8,263

Conclusion :

Depreciation for 2020 to the closest dollar is $8,263