Question

Using the Double Declining Balance (DDB) depreciation method for equipment with an initial cost of $282,000,...

Using the Double Declining Balance (DDB) depreciation method for equipment with an initial cost of $282,000, an anticipated useful life of 10 years, and a salvage value of $35,250, calculate the (a) depreciation rate, d=?, (b) the Depreciation charge, D=?, at the end of year 2, and (c) the Book Value, BV=?, at the end of year 2.

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Homework Answers

Answer #1

a ) Ans: Depreciation rate = 0.2 or 20%

Explanation:

Depreciation rate = 2 /n

= 2/ 10 = 0.2 or 20%

b ) Ans: The depreciation charge at the end of year 2  = $45120

c ) Ans: The book value ( BV ) at the end of year 2 = $180480

Explanation:

End of the year Depreciation Amount = 0.2 * Previous year book value Book Value = Previous year book value - Current year depreciation amount
0 282000.00
1 56400.00 225600.00
2 45120.00 180480.00
3 36096.00 144384.00
4 28876.80 115507.20
5 23101.44 92405.76
6 18481.15 73924.61
7 14784.92 59139.69
8 11827.94 47311.75
9 9462.35 37849.40
10 2599.40 35250.00
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