Question

Cost $75,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machi... Cost $80,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machinery using doublr-declining balance method. Be careful not to exceed the salvage value. If the salvage value is zero, switch to straightline in the year when straight-line yields higher depreciation. (use the remaining valye as the starting point when you change)

Answer 1

	Double Declining Balance method
First Scenerio
	Cost =75000 & Salvage Value 10000
	Straight-line depreication rate (1/10%)			10%
	Accelared depreciation (10*200%)			20%
		Year	Book value of the asset at the start of the year	Rate of declining Blance	Depreciation expense	Accumuluted depreciation	Book Value of asset at the end of the year
		1	75000	20%	15000	15000	60000
		2	60000	20%	12000	27000	48000
		3	48000	20%	9600	36600	38400
		4	38400	20%	7680	44280	30720
		5	30720	20%	6144	50424	24576
		6	24576	20%	4915	55339	19661
		7	19661	20%	3932	59271	15729
		8	15729	20%	3146	62417	12583
		9	12583	20%	2517	64934	10066
		10	10066	20%	66	65000	10000
Second Scenerio
	Cost =80000 & Salvage Value 10000
	Straight-line depreication rate (1/10%)			10%
	Accelared depreciation (10*200%)			20%
		Year	Book value of the asset at the start of the year	Rate of declining Blance	Depreciation expense	Accumuluted depreciation	Book Value of asset at the end of the year
		1	80000	20%	16000	16000	64000
		2	64000	20%	12800	28800	51200
		3	51200	20%	10240	39040	40960
		4	40960	20%	8192	47232	32768
		5	32768	20%	6554	53786	26214
		6	26214	20%	5243	59028	20972
		7	20972	20%	4194	63223	16777
		8	16777	20%	3355	66578	13422
		9	13422	20%	2684	69263	10737
		10	10737	20%	737	70000	10000