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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