Question

At the beginning of Year 1, Colonial Corporation purchased a new machine at a cost of $68,000. The estimated residual value was $7,000 and the estimated useful life was four years.

Required:

Calculate the depreciation expense in each year using the double-declining balance method.

Answer 1

Double Declining Balance Method
Useful Life		4	Years
Cost		$                                    68,000
Residual Value		$                                      7,000
Depreciable Value		$                                    61,000
Depreciation Rate		50.00%
Year	Depreciation Expenses	Acc Depreciation	Book Value End Of Year
1	$                               34,000	$                                    34,000	$                                34,000
2	$                               17,000	$                                    51,000	$                                17,000
3	$                                 8,500	$                                    59,500	$                                  8,500
4	$                                 1,500	$                                    61,000	$                                  7,000