A Machine Was Purchased on January 1 for $100,000

question 39

Short Answer

A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 5 years with a salvage value of $10,000. Under the double-declining-balance method, depreciation expense for each of the first two years is, respectively,
a. $45,000 and $22,500.
b. $40,000 and $24,000.
c. $45,000 and $ 27,500.
d. $22,500 and $ 22,500.

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Definitions:

Confirmation Error

A cognitive bias that involves focusing on information that confirms pre-existing beliefs or hypotheses while ignoring evidence that contradicts them.

Confirmation Error

A cognitive bias that involves focusing on information that confirms one’s preconceptions and ignoring information that contradicts them.

Anchoring and Adjustment Bias

A cognitive bias where individuals rely too heavily on the first piece of information received (the "anchor") when making decisions.

Representativeness Bias

A cognitive bias where individuals inaccurately judge the likelihood of an event by comparing it to an existing prototype in their minds.