Question

Central Supply purchased a new printer for $67,500. The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $6,750). How much is the first year’s depreciation expense if the company uses the double-declining-balance method? A. $15,000 B. $ 7,500 C. $18,000 D. $13,500 E. None of the above

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Central Supply purchased a new printer for $67,500. The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $6,750).

Annual depreciation= 2*[(original cost - residual value)/estimated life (years)]

Year 1= 2*[(67,500 - 6,750)/9]= $13,500