Question

On January 1, 2015, XIT Marketing bought a company car for $45,000. It has estimated residual value of $4,500 and an estimated useful life of five years. The company uses double-declining-balance amortization. Prepare an amortization schedule for the car. Before completing the double-declining-balance schedule, calculate the double-declining-balance rate. (Round the rate to two decimal places.) SL Amortization DDB rate Rate X Multiplier = DDB rate Complete the Double-Declining-Balance Amortization Schedule. Start by completing the first two years, and then complete the remaining years. (Enter the rate to two decimal places. Round the amortization expense to the nearest whole number. Enter the final year using the method described in the text. If a box is not used in the table, leave the box empty; do not enter a zero.) Double-Declining-Balance (DDB) Amortization Schedule Asset Cost DDB Rate Asset Book Amortization Accumulated Value Expense Amortization Asset Book Value Date Jan 1, 2015 Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Dec 31, 2018 Dec 31, 2019

Answer 1

Book value	$ 45000
Less: Salvage value	$ 4500
	$ 40500
Useful life = 5 years
As we have have to amortise it in five years, rate under SLM will be 20%
SL Amortisation rate X	DBB rate multiplier	=	DDB rate
20% X	2	=	40%
Double declining balance amortisation schedule
Date	Asset cost	DDB rate	Asset book value	Amortisation Expense	Accumulated amortisation	Asset book value
Jan 1, 2015	45000					45000
Dec 31, 2015		40%	45000	18000	18000	27000
Dec 31, 2016		40%	27000	10800	28800	16200
Dec 31, 2017		40%	16200	6480	35280	9720
Dec 31, 2018		40%	9720	3888	39168	5832
Dec 31, 2019		40%	5832	1332	40500	4,500