Your company just bought a new piece of equipment to manufacture widgets. It has a cost...

Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $275,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 150% declining balance with straight line switchover method, answer the following questions:

a) How much does the value depreciate in Year 1?

b) How much does the value depreciate in Year 2?

c) What is the book value at the end of Year 4?

d) How much does the value depreciate in Year 10?

e) In which year does the switchover occur (what is the first year of straight line depreciation)?

Solutions

Expert Solution

Ans : 150% declining balance method ,

so rate of Depreciation = 150%/13 years

= 11.54%

The Full table for Depreciation is below :

we considered year started from 2001:-

now we answered questions from above table:-

(A) $31731 (rounded) is Depreciated in year 1 (see table)

(B) $28070 (rounded) is deprecated in year 2 (see table)

(D) value depreciated in year 10 is $10526 (see table)

Rahul Sunny answered 1 year ago

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