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ABC Ltd. bought an asset at the start of an accounting year costing $100,000. Asset has...
ABC Ltd. bought an asset at the start of an accounting year costing $100,000. Asset has an expected life of 10years with a residual value of $4,000. Show the schedule of depreciation expense in each year using double declining balance method (200%) with switchover to straight line method.
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Expert Solution
| Year | Beginning BV | Depreciation % | Depreciation | Accumulated Depreciation | Ending BV |
| 1 | $ 1,00,000 | 20.00 | $ 20,000 | $ 20,000 | $ 80,000 |
| 2 | $ 80,000 | 20.00 | $ 16,000 | $ 36,000 | $ 64,000 |
| 3 | $ 64,000 | 20.00 | $ 12,800 | $ 48,800 | $ 51,200 |
| 4 | $ 51,200 | 20.00 | $ 10,240 | $ 59,040 | $ 40,960 |
| 5 | $ 40,960 | 20.00 | $ 8,192 | $ 67,232 | $ 32,768 |
| 6 | $ 32,768 | 20.00 | $ 6,554 | $ 73,786 | $ 26,214 |
| 7 | $ 26,214 | 21.19 | $ 5,554 | $ 79,340 | $ 20,660 |
| 8 | $ 20,660 | 21.19 | $ 5,554 | $ 84,894 | $ 15,106 |
| 9 | $ 15,106 | 21.19 | $ 5,554 | $ 90,448 | $ 9,552 |
| 10 | $ 9,552 | 21.19 | $ 5,552 | $ 96,000 | $ 4,000 |
| CALCULATIONS: | |||||
| Deprecition % = (100%/10)*2 = 20% |
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