In: Accounting
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 =
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 |