Question 14 A machine initally costing $520000 will have salvage value of $2000 after a 6...

Question 14
A machine initally costing $520000 will have salvage value of $2000 after a 6 year life. using double declining balance depreciation what will the book value be after the third year

Solutions

Expert Solution

Cost	520,000
Useful life	6
Salvage	2,000
Rate	33.33%

Calculation of rate in double declining balance method:

Therefore, substituting the values, we get.

Year	Opening Book Value	Rate	Depreciation	Closing Book Value
1	520,000.00	33.33%	173,316.00	346,684.00
2	346,684.00	33.33%	115,549.78	231,134.22
3	231,134.22	33.33%	77,037.04	154,097.19
4	154,097.19	33.33%	51,360.59	102,736.59
5	102,736.59	33.33%	34,242.11	68,494.49
6	68,494.49	-	66,494.49	2,000.00

From above table, we can see that book value after 3 years is $154,097.19

Excel Formulas:

jeff jeffy answered 1 year ago

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