Question

On September 6, 2006, ABC Company purchased a new boat for $510,000. The estimated life of the boat was 20 years, with an estimated residual value of $50,000. On October 1, 2019, the boat was sold for $78,000. ABC Company used double-declining balance method and applied half-year convention. What was book value of the boat in the beginning of the year of 2007?

Answer 1

$ 484,500

Calculations:

Depreciation Rate (as per double declining method) = 100 / Years * 2

A	Cost	$ 510,000
C	Number of years	20
(100/C*2) =D	Depreciation Rate (Double declining method)	10%

Now,

Year	Value at the beginning	Depreciation every year (10%)	Accumulated depreciation	Value at the end
2006	$                       510,000	$                            25,500	$                                 25,500	$            484,500
2007	$                       484,500	$                            48,450	$                                 73,950	$            436,050