A three-year-old machine that has a cost of $63,000, an estimated residual value
ID: 2432886 • Letter: A
Question
A three-year-old machine that has a cost of $63,000, an estimated residual value of $5,800, and an estimated useful life of five years. The company uses double-declining-balance depreciation.
Calculate the net book value at the end of each year.
Net book value:
First year
Second year
Third year
A three-year-old machine that has a cost of $63,000, an estimated residual value of $5,800, and an estimated useful life of five years. The company uses double-declining-balance depreciation.
Calculate the net book value at the end of each year.
Net book value:
First year
Second year
Third year
Explanation / Answer
Annual depreciation rate as per straight line method=100/5=20%/year
Hence depreciation as per double decline balance=2*Annual depreciation rate as per straight line method*Beginning value of each period
Year Beginning value Depreciation Net book value at end of year 1 63000 (2*20%*63000)=$25200 (63000-25200)=$37800 2 37800 (2*20%*37800)=$15120 (37800-15120)=$22680 3 22680 (2*20%*22680)=$9072 (22680-9072)=$13608.Related Questions
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