Machinery was purchased on January 1 for $52,920. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year (rounded to the nearest dollar) would be:a. $10,800b. $10,300c. $11,800d. $9,800

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Description: Machinery was purchased on January 1 for $52,920. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year (rounded to the nearest dollar) would be:a. $10,

Lets understand the basics. In double declining balance method, depreciation is calculated in accelerated mode. It is calculated at the double of the straight line basis rate. Rate of depreciation = (1/Useful life) * 2 * 100 After calculating depreciation rate, depreciation in first year is calculated on cost price and then from second year it is calculated on the carried forward balance of the asset. So here in this case, Depreciation rate = (1/7) * 2 * 100 = 28.57% Depreciation schedule:- Year Beginning balance(A) Depreciation (B) = (A * 28.57%) Closing balance (C) = (A-B) 1 52,920 15,120 37,800 2 37,800 10,800 27,000 So depreciation for second year is $10,800. Therefore Option A is correct answer.

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Machinery was purchased on January 1 for $52,920. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Doubl declining-balance depreciation for the second year (rounded to the nearest dollar) would be: a. $10,800 Ob. $10,300 Oc. $11,800 Od. $9,800

Machinery was purchased on January 1 for $52,920. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Doubl declining-balance depreciation for the second year (rounded to the nearest dollar) would be: a. $10,800 Ob. $10,300 Oc. $11,800 Od. $9,800

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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