Question: PROBLEM: Satoshi Mining purchased a new mining rig on January 20th, 2020 for $25,420. They estimate the machine to last for 5 years and mine

PROBLEM: Satoshi Mining purchased a new mining rig on January 20th, 2020 for $25,420. They estimate the machine to last for 5 years and mine 10,000 bitcoin. At the end of its estimated useful life, they expect the mining rig to have a residual value of $10,000. 6,000 actual bitcoins were mined in 2020 and 5,000 actual bitcoin were mined in 2021.

2020- Units of Activity method

Machine cost $25,420 - Estimated Residual Value $10,000 = $15,420 Initial Depreciable Basis

$15,420 Depreciable Basis/ Estimated Units of Production 10,000 = Depreciation per unit $1.54

$1.54 x actual production 11,000 units = $16,940 Depreciation Expense for 2021

_______________________________________

Calculate the depreciation expense for 2020 on this problem using the Double-Declining-Balance Method.

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