Answer:
B .) $54,857
Explanation:
Depreciation rate using double reducing balance method is calculated as 10% divided by the number of years of useful life; this is then multiplied by 2. The depreciation is then calculated as the depreciation rate X Net Book Value of the asset
The depreciation rate for the first year = 100%/10 * 2 = 20%
2012
The depreciation expense = 20% X $750,000 = $150,000
The net book value at the end of the year = $750,000 - $ 150,000 = $600,000
2013
The depreciation expense = 20% X $600,000 = $120,000
The net book value at the end of the year = $600,000 - $ 120,000 = $480,000
2014
The depreciation expense = 20% X $480,000 = $96,000
The net book value at the end of the year = $480,000 - $ 96,000 = $384,000
2015
At the beginning of 2015, the method was changed to straight line method. In line with the International Standards of Accounting on change in accounting estimates (ISA 8), this change would be applied progressively i.e the remaining net book value would be divided over the remaining no of useful life to arrive at the year depreciation
As at the beginning of 2015, 3 years have passed. The remaining no of useful life is 7 years and the NBV is $384,000 as seen in the computation of NBV at the end of 2014
Depreciation = $384,000/7 = $54,857
