Question

For a $10,000 communications system with a useful life of 5 year and salvage value of $778, construct the annual depreciation allowance table (including depreciation amounts and book values), using double-declining depreciation method.

Answer 1

Staright line depreciation value = (100% / Number of year) = 20%

Double declining depreciation rate = 2 * Straight line depreciation rate = 40%

Depreciated amount = Beginning value of each year - Depreciation rate * Beginning value of each year

End value = Beginning value of each year - Depreciated amount

End value of previous year is beginning value of current year.

End value at the end of year 5 is salvage value.

Year	Beginning Value	Depreciation Rate	Depreciated Amount	End Value
1	10000	40%	4000	6000
2	6000	40%	2400	3600
3	3600	40%	1440	2160
4	2160	40%	864	1296
5	1296	40%	518.4	777.6