Solar Products purchased a machine for $39,000 on July 1, 2012. The company intends to depreciate it over 4 years using the double-declining balance method. Salvage value is $3,000.

Depreciation for 2013 is:

a. $19,500b. $9,750c. $14,625d. $9,000

Option (c) is correct.

Explanation:

Given that,

Cost of machine = $39,000

Depreciation years = 4

Salvage value = $3,000

Straight line rate:

= (100 : 4) %

= 25%

Double declining rate:

= (2 * Straight line rate)

= (2 * 25) %

= 50%

Depreciation for year 2012:

= Cost of machine * Double declining rate * Time period

= $39,000 * 50% * 6/12

= $9,750

Depreciation for 2013:

= (cost of machine - Depreciation for year 2012) * Double declining rate

= (39,000 - $9,750) * 50%

= $14,625