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A small business purchases some office furniture for $43000 and will sell it for an estimated...

A small business purchases some office furniture for $43000 and will sell it for an estimated $6000 in 5 years. (Replace them with new furniture)

3. Calculate the 4th year depreciation amount, using DDB depreciation.

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Answer #1

Rate of depreciation using Double Declining Balance:

Rate of Depreciation under Straight Line method = 1 / Life time = 1 / 5 = 20.00%

Rate of Depreciation under Double Declining Balnce Method = 2 * Rate under Straight Line

= 2 * 20.00%

= 40.00%

Year Opening Balance Depreciation Closing Balance
1 $     43,000.00 $     17,200.00 $ 25,800.00
2 $     25,800.00 $     10,320.00 $ 15,480.00
3 $     15,480.00 $        6,192.00 $        9,288.00
4 $        9,288.00 $        3,288.00 $        6,000.00

The Written down balance must be restricted to salvage value.

Year 4 depreciation is $ 3,288

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