Question

On January 1, 2010, Knapp Corporation acquired machinery at a cost of $500,000. Knapp adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2013, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2013 would be

a. $25,600.
b. $36,572.
c. $50,000.
d. $71,428.

Answer 1

The depreciation expense for 2013 using the straight-line method would be $71,428. The correct option is D.

Step-by-step explanation:

To calculate the depreciation expense for 2013 using the straight-line method, we need to determine the remaining useful life of the machinery.

Since the machinery was initially expected to have a useful life of 10 years and it was already in use for 3 years at the beginning of 2013, the remaining useful life is 7 years (10 - 3 = 7).

To calculate the depreciation expense using the straight-line method, we divide the cost of the machinery ($500,000) by its remaining useful life (7 years): $500,000 / 7 = $71,428. Therefore, the correct answer is option d: $71,428.