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A surface mount placement machine is being purchased for $1576000; it has an estimated useful life...

A surface mount placement machine is being purchased for $1576000; it has an estimated useful life of 8 years and a salvage value of $58900 at that time. Determine the depreciation allowance for the 5th year and the book value at the end of the 5th year using Declining Balance where the depreciation rate is determined by the salvage value and time in service. what is the depreciation rate?

%

d5 = $

B5 = $

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Answer #1

Depreciation rate = 1/number of years ago *2 =1/8*2 = 25%

Depreciation year 1 =1576000*25%=394000

Book value year 1 = 1576000-394000= 1182000

Depreciation year 2=1182000*25%= 295500

Book value year 2= 1182000-295500 = 886500

Depreciation year 3= 886500*25%=221625

Book value year 3 = 886500-221625 =664875

Depreciation year 4= 664875*25%=166219

Book value year 4 = 664875-166219 = 498656

Depreciation year 5 = 498656*25%=124664

Book value year 5 =498656-124664 =373992

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