Question

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the double-declining-balance method.

Answer 1

Answer:

Annual depreciation= $48,000

Explanation:

Giving the following information:

Purchasing price= $135,000

Salvage value= $15,000

Useful life= 5 years

To calculate the depreciation expense under the double-declining method, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Annual depreciation= 2*[(135,000 - 15,000) / 5]

Annual depreciation= $48,000