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7 April, 19:16

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

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Answers (1)
  1. 7 April, 21:15
    0
    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
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