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The results of accelerated tests showed that the average useful life of most laptops is 3...

The results of accelerated tests showed that the average useful life of most laptops is 3 years, and have a $50 salvage value at the end of year 3. A company is trying to evaluate how much their laptops have depreciated. According to the double-declining balance (DDB) depreciation method, a 2-year old laptop has a book value of $100. Determine the first cost of the laptop.

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Answer #1
Year Depreciation rate Depreciation Book value
0
1 2/3
2 2/3 $ 100
3 2/3 $ 50 $ 50

Let us assume the price of laptop = $ I

Book value at the end of year 2 = $ 100

Book value after 2 years can be determined using the following formula

First cost of laptop = $ 900

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me please help. Thank you

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