Question

On January 1, 2018, ABC Company purchased a new machine for $200,000.
The machine was assigned a $5,000 residual value and a 20-year life.
ABC Company will depreciate the machine using the double-declining
balance depreciation method.

Calculate the book value of the machine at December 31, 2022.

Answer 1

Annual depreciation rate as per straight line method=(100/20)=5%/year

Hence depreciation as per double decline balance=2*Annual depreciation rate as per straight line method*Beginning value of each period

Year	Beginning value	Depreciation	Ending value
2018	200,000	(2*5%*200,000)=20,000	(200,000-20,000)=$180,000
2019	180,000	(2*5%*180,000)=18000	(180,000-18000)=162000
2020	162000	(2*5%*162000)=16200	(162000-16200)=145800
2021	145800	(2*5%*145800)=14580	(145800-14580)=$131220
2022	131220	(2*5%*131220)=13122	131220-13122)=$118098.