Question

On January 1, 2019, Seek Company purchased a copy machine. The machine costs $960,000, its estimated useful life is 8 years, and its expected salvage value is $60,000. What is the depreciation expense for 2020 using double-declining-balance method?A. $157,500B. $ 105,000C. $180,000D. $240,000

Answer 1

C. $180,000

Step-by-step explanation:

Double-declining-balance method is otherwise known as the Reducing Balance Method.

Depreciation Expense = 2 × SLDP × BVSLDP

SLDP = 100 ÷ Number of useful life

= 100 ÷ 8

= 12.50 %

Year - 2019

Depreciation Expense = 2 × 12.50 % × $960,000

= $240,000

Year - 2020

Depreciation Expense = 2 × 12.50 % × ($960,000 - $240,000)

= $180,000