Question

In: Accounting

A small business purchases some office furniture for $43000 and will sell it for an estimated...

A small business purchases some office furniture for $43000 and will sell it for an estimated $6000 in 5 years. (Replace them with new furniture)

7. If the firm used the DDB depreciation, NPW =

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Expert Solution

Answer:
If the firm used the DDB depreciation, NPW = $ 3343.68
Calculation as below.
Book value of Asset =   $ 43,000.00
Life of the AsseT in years =   5
DDB Depreciation rate = 2 X Straight-Line Depreciation Percent = 40%
DDB depreciation for the period = 40% x Book Value at Beginning of the Period
Below is calculation table of NPW:
Year Book Value Depreciation Depreciation Accumulated Book Value
Year Start Rate Expense Depreciation Year End
1 $43,000.00 40% $17,200.00 $17,200.00 $25,800.00
2 $25,800.00 40% $10,320.00 $27,520.00 $15,480.00
3 $15,480.00 40% $6,192.00 $33,712.00 $9,288.00
4 $9,288.00 40% $3,715.20 $37,427.20 $5,572.80
5 $5,572.80 40% $2,229.12 $39,656.32 $3,343.68

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