Final answer:
To calculate the 2014 depreciation expense using the double-declining balance method, we double the straight-line rate of 12.5% to 25%, apply it to the depreciable base of $36,000 to get $9,000, and then halve it for half-year depreciation, resulting in $4,500.
Step-by-step explanation:
To calculate the depreciation for 2014 using the double-declining balance method for the machine Slotkin Products purchased, we need to first determine the depreciation rate. Since the machine has a useful life of 8 years, the straight-line depreciation rate would be 1 / 8, or 12.5%. For the double-declining balance method, this rate is doubled, which gives us 25%.
The next step is to apply this rate to the book value of the asset at the beginning of the year. However, because the machine was purchased on July 1, 2014, we will only depreciate it for half the year for the 2014 calculation. The purchase price of the machine is $39,000, and we subtract the salvage value of $3,000, leaving us a depreciable base of $36,000.
We apply the 25% rate to this depreciable base, which results in an annual depreciation of $9,000. Since we are only depreciating for half the year in 2014, we divide this amount by 2, resulting in a depreciation expense for 2014 of $4,500.