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DBM: A property that is book-depreciated over a 10-year period by the Declining Balance Method has...

DBM: A property that is book-depreciated over a 10-year period by the Declining Balance Method has $27,208.81 book value on the 3rd year. Determine the assumed salvage value of the property (round-off k to 4 decimal places).

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Expert Solution

To know the salvage value we will first determine the % of the book value of 3rd year as compared to the original cost. this can be done by first calculating the rate of depreciation which is 1/ no of years of life of asset = 1/10 = 10%.

Book value is equal to cost or opening balance - depreciation

Now, as the book value of third year is equal to 72.90% which is equal to 27208.81, the cost can be determined by 27208.91*100/72.90 = $37,323.47

So,

So the salvage value = $13,013.8895

ekkarill92 answered 2 years ago
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