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Double-Declining-Balance Depreciation A building acquired at the beginning of the year at a cost of $76,400...

Double-Declining-Balance Depreciation

A building acquired at the beginning of the year at a cost of $76,400 has an estimated residual value of $3,100 and an estimated useful life of four years. Determine the following.

(a) The double-declining-balance rate %
(b) The double-declining-balance depreciation for the first year $
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Answer #1

Answer:-a)- The double-declining-balance rate:-50%

b)- The double-declining-balance depreciation for the first year=$38200

Explanation:- Double Declining balance depreciation is calculated using the following formula:

Depreciation = Depreciation Rate * Book Value of Asset

Depreciation rate is given by the following formula:

Depreciation Rate = Accelerator *Straight Line Rate

Straight-line Depreciation Rate = 1/4 = 0.25 = 25%
Declining Balance Rate = 2*25% = 50%

Depreciation for first year = ($76400 *50%) = $38200

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