Final answer:
The first year depreciation of equipment for Albany Corporation using the double-declining-balance method is $14,062.50, taking into account that the equipment is only in use for nine months of the year.
Step-by-step explanation:
The question is asking to calculate the first year depreciation of equipment purchased by Albany Corporation using the double-declining-balance method. To calculate depreciation using this method, we need to determine the annual depreciation rate and then apply it twice (double) to the asset's book value at the beginning of the year. As the equipment has an 8-year service life, the normal straight-line depreciation rate would be 1/8 (12.5%) annually. The double-declining-balance rate is therefore 25%.
Since the equipment was purchased on April 1 of year 1, we will only depreciate it for nine months in the first year. The cost of the equipment is $75,000, and applying the 25% depreciation rate gives us an annual depreciation of $18,750. To account for the nine months of use, we take 3/4 of the annual depreciation (since 9 months is three-quarters of a year), which amounts to $14,062.50. So, the correct answer is B. $14,062.50.