On January 1, 2019, Seek Company purchased a copy machine. The machine costs $960,000, its estimated...

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?

Select one:

A. $157,500

B. $ 105,000

C. $180,000

D. $240,000

Solutions

Expert Solution

Working

A	Cost	$ 960,000.00
B	Residual Value	$ 60,000.00
C=A - B	Depreciable base	$ 900,000.00
D	Life [in years]	8
E=C/D	Annual SLM depreciation	$ 112,500.00
F=E/C	SLM Rate	12.50%
G=F x 2	DDB Rate	25.00%

Year	Beginning Book Value	Depreciation rate	Depreciation expense	Ending Book Value	Accumulated Depreciation
2019	$ 960,000.00	25.00%	$ 240,000.00	$ 720,000.00	$ 240,000.00
2020	$ 720,000.00	25.00%	$ 180,000.00	$ 540,000.00	$ 420,000.00

Correct Answer = Option ‘C’ $ 180,000

ekkarill92 answered 1 year ago

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