Question

A company buys a 3D printing machine for $180,000. The manager is debating whether she should depreciate it using 150% Declining Balance and Double Declining Balance depreciation method. The machine It is estimated that after 12 years, the machine will have a salvage value of $30,000. What are the book values after 12 years for both methods? And which of the two methods, writes off more of the initial cost over 12 years?

Answer 1

SOLUTION:-

Dep rate for 150% DDB = 1.5/12 = 0.125

dep rate for 200% DDB = 2/12 = 0.16667

BV after 12 yrs using 150% DDB = 180000*(1-0.125)^12 = 36255.10

BV after 12 yrs using 200% DDB = 180000*(1-0.16667)^12 = 20187.23

Cumulative dep using 150% DDB = 180000 - 20187.23 = 15981.77

200% DDB writes off more of the initial cost over 12 yrs

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