Double Declining Balance Method -- Commercial Lawn Mower: Acquired January 1. Purchased for $14,000; salvage value is $2,000. Useful life is 5 years.
A. Is the salvage value used to compute book value (circle the answer)? Yes or No
B. How is the double declining rate computed?
C.Complete the following Double Declining Balance Table:
Year | Book Value: Start of Year | DDB Percent | Annual Depreciation Expense | Accumulated Depreciation | Book Value: End of Year |
---|---|---|---|---|---|
Year 1 | |||||
Year 2 | |||||
Year 3 | |||||
Year 4 | |||||
Year 5 |
D. What amount must the balance in the accumulated depreciation account equal in year 4?
E. In which year does the Straight Line Depreciation expense exceed the Double-Declining Balance Depreciation?
F. How does the depreciation requirement after calculations in year 4?
A. Yes
B. DDB depreciation rate = 2 X (1/useful life) X 100
= 2X(1/5) X 100
=40%
C. DDB table:
D. Answer: $12186
E. 3rd year ( as per SL depreciation $2400 and as per DDB $2016)
F. Answer: $ 726
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