Answer :
Answer:
option (a) $10,800
Explanation:
Data provided in the question:
Useful life of the machine = 5 years
Residual value = $15,000
Purchasing cost = $45,000
Now,
The rate of depreciation under the double declining method
Rate of depreciation = [tex]\frac{2\times\textup{1}}{\textup{Useful life}}[/tex]
or
Rate of depreciation = [tex]\frac{2\times\textup{1}}{\textup{5}}[/tex]
or
Rate of depreciation = 0.4 or 40%
Therefore,
Depreciation expense for the year 1
= Rate of depreciation × Book value in year 1
= 0.40 × $45,000
= $18,000
Book value in year 2 = $45,000 - $18,000
= $27,000
Depreciation expense for the year 2
= Rate of depreciation × Book value in year 2
= 0.4 × $27,000
= $10,800
Hence,
The correct answer is option (a) $10,800