A new electric saw for cutting small pieces of lumber in a furniture manufacturing plant has...

A new electric saw for cutting small pieces of lumber in a furniture manufacturing plant has a cost basis of $6,000 and a 10-year depreciable life. The estimated SV of the saw is zero at the end of 10 years. Use the DB method to calculate the annual depreciation amounts when:
(a) R = 2/N (200% DB method)

(b) R = 1.5/N (150% DB method)

Expert Solution

	Book valuet = Book valuet-1 - Depreciationt	2/10 = 20%	Book valuet = Book valuet-1 - Depreciationt	1.5/10 = 15%
Year	Book Value	Depreciation at 200%	Book Value	Depreciation at 150%
1	6,000	1,200	6,000	900
2	4,800	960	5,100	765
3	3,840	768	4,335	650
4	3,072	614	3,685	553
5	2,458	492	3,132	470
6	1,966	393	2,662	399
7	1,573	315	2,263	339
8	1,258	252	1,923	289
9	1,007	201	1,635	245
10	805	161	1,390	208
	644		1,181
Total depreciation		5,356		4,819
Book value at the end of Y10		644		1,181

Rahul Sunny answered 1 year ago

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