Question

Your company has purchased a large new truck-tractor for over the road use. It has a cost basis of $209,697. Its MV at the end of 18 years is estimated as $1,271. Assume it will be depreciated using DDB method and the depreciation period is 18 years. What is the depreciation payment in year 4?

Answer 1

Depreciation payment in year 4 = $16,363

Depreciation Schedule under Double Declining Balance (DDB) Method

Year	Book Value at the beginning	Depreciation Rate	Annual Depreciation	Book Value at the end
1	209,697	11.11%	23,297	186,400
2	186,400	11.11%	20,709	165,691
3	165,691	11.11%	18,408	147,283
4	147,283	11.11%	16,363	130,920
5	130,920	11.11%	14,545	116,375
6	116,375	11.11%	12,929	103,446
7	103,446	11.11%	11,493	91,953
8	91,953	11.11%	10,216	81,737
9	81,737	11.11%	9,081	72,656
10	72,656	11.11%	8,072	64,584
11	64,584	11.11%	7,175	57,409
12	57,409	11.11%	6,378	51,031
13	51,031	11.11%	5,670	45,361
14	45,361	11.11%	5,040	40,321
15	40,321	11.11%	4,480	35,841
16	35,841	11.11%	3,982	31,859
17	31,859	11.11%	3,540	28,319
18	28,319	11.11%	3,146	25,173

*Depreciation Rate = 2 x ( 1 / 18 ) = 11.11%

Hence, Depreciation payment in year 4 = $16,363