Question

what is the amount of double declining balance depreciation for your four if the cost of an asset is $75,000 the useful life is five years in the salvage value is $4000 ?

Answer 1

Depreciation rate = 2 × 100/ useful life

= 2× 100%/5 =40%

Depreciation schedule for 5 years (amt in $)

Year BV (start) depreciation    BV (end)

1 75,000    75,000×40%=$30,000 45,000

2 45,000 45,000×40%=$18,000 27,000

3 27,000 27,000×40%=$10,800 16,200

4 16,200 16,200×40%=$6,480 9,720

5 9,720    =$5,720(balancing figure) 4,000

Note÷

The last year depreciation is not 40 %. It is the balancing figure so as to keep the salvage value at the end in the books of accounts.