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7 April, 01:09

Machinery was purchased on January 1 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year would be (round calculations to the nearest dollar) : A. $10,929B. $10,408C. $10,500D. $6,000

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  1. 7 April, 04:59
    0
    Option (B) is correct.

    Explanation:

    Given that,

    Purchasing cost = $51,000

    Estimated life of machinery = 7 years

    Estimated salvage value = $9,000

    Depreciation rate under Double declining balance method:

    = (1 : Useful life) * 200%

    = (1 : 7) * 200%

    = 28.57%

    First year depreciation = Purchasing cost * Depreciation rate

    = $51,000 * 28.57%

    = $14,571

    Second Year depreciation:

    = (Purchasing cost - First year depreciation) * Depreciation rate

    = ($51,000 - $14,571) * 28.57%

    = $10,408
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