Question

2. A membrane-based separation system is purchased by a water purification company. They purchased a system with 10-year depreciable life for $1,000,000. Use DB method to calculate annual depreciation amounts when (a) 200% DB method (b) 150% DB method. Tabulate the annual depreciation amount and BV for each year.

Answer 1

a)

Year - a	Net Book value, beginning of year - b	Declained depreciation - c = b/Life of assets*200%	Net book value, End of the year - d = b-c
1	$                                      1,000,000	$   200,000	$ 800,000
2	$                                          800,000	$   160,000	$ 640,000
3	$                                          640,000	$   128,000	$ 512,000
4	$                                          512,000	$   102,400	$ 409,600
5	$                                          409,600	$     81,920	$ 327,680
6	$                                          327,680	$     65,536	$ 262,144
7	$                                          262,144	$     52,429	$ 209,715
8	$                                          209,715	$     41,943	$ 167,772
9	$                                          167,772	$     33,554	$ 134,218
10	$                                          134,218	$   134,218	$                -

b)

Year - a	Net Book value, beginning of year - b	Double declained depreciation - c = b/Life of assets*150%	Net book value, End of the year - d = b-c
1	$                                      1,000,000	$   150,000	$ 850,000
2	$                                          850,000	$   127,500	$ 722,500
3	$                                          722,500	$   108,375	$ 614,125
4	$                                          614,125	$     92,119	$ 522,006
5	$                                          522,006	$     78,301	$ 443,705
6	$                                          443,705	$     66,556	$ 377,150
7	$                                          377,150	$     56,572	$ 320,577
8	$                                          320,577	$     48,087	$ 272,491
9	$                                          272,491	$     40,874	$ 231,617
10	$                                          231,617	$   231,617	$                -

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