Question

A machine costing $99,375 with a five-year life and $6,000 residual value was purchased January 2. Compute depreciation for each of the five years, using the double-declining-balance method.

Year 1	$
Year 2	$
Year 3	$
Year 4	$
Year 5

Answer 1

Cost of equipment = 99,375

Residual value = $6,000

Double declining depreciation = 2 x 1/useful life

= 2 x 1/5

= 40%

Year	Beginning Value	Depreciation expense (Beginning value x Double Declining Depreciation rate-40%)	Accumulated depreciation ( Current year depreciation + Last year depreciation)	Ending value ( Beginning value - Depreciation expense )
1	99,375	39750	39750	59,625
2	59,625	23850	63600	35,775
3	35,775	14310	77910	21,465
4	21,465	8586	86496	12,879
5	12,879	5152	91,648	7,727