Question

Calculate 1,000,000 of investment to be deprecated over 6 years using Declining Balance Depreciation method and...

Calculate 1,000,000 of investment to be deprecated over 6 years using Declining Balance Depreciation method and declining balance rate of 180%. Show your work in detail please.

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Answer #1

(Assuming Values as ($) and No Salvage Value Provided for the given investment

Investment Cost: 10,00,000.00

Salvage Value: 0

Life: 6 Years

Declining Balance Rate: 180% therefore, the depreciation factpor is taken as (1.8)

Note:

The depreciation factor is used to calculate the depreciation rate per year. since the given double declining depreciation is 180%, the factor is taken as 1.8.

Under Stright Line Method (SLM), the 6 year life means, the asset's annual depreciation will be 6% of the asset's cost. Under Double Declining Balance Method of calculating the depreciation, the 6% stright line rate is doubled to 12%.

The calculation of depreciation for the given data is as follows:

At the end of the year, the value of the investment is around $4,64,404.00 after reducing ythe depreciation amounts.

Thank You.

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