A Machine Is Purchased on January 1,2018,for $90,000

question 104

Multiple Choice

A machine is purchased on January 1,2018,for $90,000.It is expected to have a useful life of five years and a residual value of $5,000.The company closes its books on December 31.Under the double-declining balance method,what is the total amount of depreciation to be expensed during the 2019 fiscal year (year 2 of 5) ?

• A)$21,600
• B)$22,000
• C)$22,400
• D)$34,000

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Definitions:

Undistributed Earnings

Refers to the portion of a company's net profits that has not been paid out to shareholders as dividends but is retained for reinvestment in the business or to pay off debt.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.

Net Operating Loss Carryforward

A tax provision that allows businesses to use a net operating loss in one year to offset taxable income in future years.