0 Required information The following information applies to the questions displa
ID: 2556712 • Letter: 0
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0 Required information The following information applies to the questions displayed below/ On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000 Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the d balance method. (Enter all amounts positive values) ouble-declining Depreciation for the Period End of Period Annual Period Period Book Depreciation Partial Depreciation Accumulated 2016 2017 Beginning of Value S 280,000 Expense Depreciation Book Value 9/12Explanation / Answer
DDB Depreciation (Double Declining Balance)
It is a method of depreciation used by the companies when they want to quickly depreciate an asset.
The asset will depreciate much faster under this method than straight-line because we double the percentage that would be depreciated each year under straight-line.
Salvage value is not subtracted from Cost of Asset when depreciation is calculated by using this method.
The formula for double declining balance is:
Annual depreciation = Book Value * 100% / life * 2
Calculate the percentage that should be used first.
Percentage = 100% / Useful Life x 2 = 100% / 5 Years x 2 = 40%
Once the percentage is calculated, it is the same for the rest of the asset’s life.
Annual Period
Depreciation for the period
End of Period
Beginning of period book value
Depreciation Rate
Partial Year
Depreciation Expenses
Accumulated Depreciation
Book Value
2016
280,000
40.00%
9/12
84,000
84,000
196,000
2017
196,000
40.00%
78,400
162,400
117,600
Annual Period
Depreciation for the period
End of Period
Beginning of period book value
Depreciation Rate
Partial Year
Depreciation Expenses
Accumulated Depreciation
Book Value
2016
280,000
40.00%
9/12
84,000
84,000
196,000
2017
196,000
40.00%
78,400
162,400
117,600
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