Double-Declining-Balance Depreciation A computer was purchased on January 1 at a

Question

Double-Declining-Balance Depreciation A computer was purchased on January 1 at a cost of $5,000. It has an estimated useful life of five years and an estimated salvage value of $500 Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the double-declining-balance method. For intermediate calculations, do not round your depreciation rate value and round your final answers to the nearest dollar. If an answer is zero, enter "O". Computer Depreciation Schedule On January 1 Accumulated Depreciation End of Year Book Value End of Year Book Value Year Beginning of Year x Rate (90): Depreciation Expense 4

Explanation / Answer

Double decling depreciation rate:

(1/no. of years of life expected)×200%

=(1/5 years)×200%=40% and its depreciation stops when the book value equals salvage value.

DEPRECIATION SCHEDULE:

rate%[B]

depreciation expense

[A×B]

* Indicates that depreciation always stops where book value equals residual value.

Year Book value in the beginning of the year($)[A]

rate%[B]

depreciation expense

[A×B]

Accumulated Depreciation in the year end($) Book value end of the year($) 1 5000 40 2000 2000 3000 2 3000 40 1200 3200 1800 3 1800 40 720 3920 1080 4 1080 40 432 4352 648 5 648 40 148* 4500 500

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