Question

Grouper Company purchased a machine for $114,800 with an estimated salvage value of $14,800. If the machine is expected to be used for 10,000 working hours over 4 years, what is the depreciation expense under declining balance using double the straight line rate for 2020 and 2021?

a) $28,700 for 2020 and $14,350 for 2021
b) $28,350 for 2020 and $14,175 for 2021
c) $57,400 for 2020 and $28,700 for 2021
d) $57,200 for 2020 and $28,600 for 2021

Answer 1

The depreciation expense under declining balance using double the straight-line rate for 2020 and 2021 is $28,700 for 2020 and $14,350 for 2021.

Step-by-step explanation:

The depreciation expense under declining balance using double the straight-line rate for 2020 and 2021 can be calculated as follows:

Straight-line rate = 1 / Useful life = 1 / 10000 = 0.0001

Double the straight-line rate = 2 * 0.0001 = 0.0002

Depreciation expense for 2020 = Book value at the beginning of the year * Double the straight-line rate = ($114800 - $14800) * 0.0002 = $22.8

Depreciation expense for 2021 = Book value at the beginning of the year * Double the straight-line rate = ($114800 - $22.8) * 0.0002 = $22.754

Therefore, the correct option is a) $28,700 for 2020 and $14,350 for 2021.