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Declining Balance Method The cost of the asset: $6,000.00 The salvage value: $800.00 The life of...

Declining Balance Method

The cost of the asset: $6,000.00
The salvage value:      $800.00
The life of the asset: 5 years

Calculate the Book Value to the Nearest One Dollar at End of Year 4. Please show work.
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Answer #1
Depreciation rate = 1/5*2 = 40%
Depreciation for year 1 = 6000*40% = 2400
Depreciation for year 2 =(6000-2400)*40% = 1440
Depreciation for year 3 =(6000-2400-1440)*40% = 864
Book value at the end of year 3 = 6000-2400-1440-864=1296
Depreciation for year 4 will be lesser of:
Depreciation for year 4 = 1296-800 = 496
Depreciation for year 4 =(6000-2400-1440-864)*40% = 518
Depreciation for year 4 = 496
Book Value at the end of year 4 = 1296-496 = $800
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