Question

a tool and a die company owns several models of lathes that have a total cost of $15,000.000.00 a salvage value of $2750,000.00 and a life of five years.

A.)Develop a table of depriciation and book values using double declining balance depriciation

Answer 1

The asset value is $15000000 and salvage value is $2750000.

The double declining method does not take into account the salvage value while calculating the depreciation.
However, depreciation is not calculated once the salvage value is reached.

Depreciation = Asset Value * Depreciation Rate

1st year
15000000 * 0.4 = 6000000
End Book Value
Initial Asset Value - Accumulated Depreciation
15000000 - 6000000 = 9000000

2nd year
9000000 * 0.4 = 3600000
End Book Value
15000000 - (6000000 + 3600000)
= 5400000

We can create a table for these calculations

Year	Beginning Book Value	Depreciation Percent	Depreciation Amount	Accumulated Depreciation Amount	Ending Book Value
1.	$15,000,000.00	40.00%	$6,000,000.00	$6,000,000.00	$9,000,000.00
2.	$9,000,000.00	40.00%	$3,600,000.00	$9,600,000.00	$5,400,000.00
3.	$5,400,000.00	40.00%	$2,160,000.00	$11,760,000.00	$3,240,000.00
4.	$3,240,000.00	15.12%	$490,000.00	$12,250,000.00	$2,750,000.00
5.	$2,750,000.00	0.00%	$0.00	$12,250,000.00	$2,750,000.00