Question

Schoove of Depreciation Cost 4 1 ay. op 2gooo 4800 18,200 1800 16,400 922 BV 903 B.V 14,600 2 Rearcing Balance Calculate fixed rate & cable it 20,000 -2000 5 years a=200 Straight the percentage=20% Double 40% 0.40620,000 ,00 2592 - 592 2000 Cost 2 0oo 9-10216. 8,000 B.V. 12,000 g² Dalton 4800 7200 93 Dynor 2880 BV 4320 94 1728 R 2592

Answer 1

I think you want to ask what is 100/5

In double declining method we use double the rate of what the rate would have been in case of straight line depreciation.

In this calculation we ignore salvage value and assume that we have to depreciate 100% of cost. Since life is 5 year.

So straight line depreciation (each year same) will be 100% / 5 = 20% each year.

So by depreciating 20% each year , in 5 year asset will be fully depreciated in straight line.

But in double declining we will use double of this rate so we will depreciate it @ 20* 2 = 40%

This rate will be applied on the remaining balance of asset each year. For example in year 3 depreciation is calculated on 7200 which is the remaining book value.

Feel free to ask any queries..

Also plz upvote it means a lot.. thank you