Question

13	Complete the following Chart – using the Declining-Balance method for the vehicle that depreciates over 5 years, was purchased at $17000, and will have a salvage value of $2000
Year Book Value (Start of Year) Depreciation Expense Accumulated Depreciation Book Value - End of Year 1 $17,000 (Original Cost) 2 3 4 5 $2,000 (Scrap Value)

Answer 1

Useful Life = 5 years

Straight-line Depreciation Rate = 1 / Useful Life
Straight-line Depreciation Rate = 1 / 5
Straight-line Depreciation Rate = 20%

Double-declining Depreciation Rate = 2 * Straight-line Depreciation Rate
Double-declining Depreciation Rate = 2 * 20%
Double-declining Depreciation Rate = 40%

Year 1:

Depreciation Expense = 40% * $17,000
Depreciation Expense = $6,800

Year 2:

Depreciation Expense = 40% * $10,200
Depreciation Expense = $4,080

Year 3:

Depreciation Expense = 40% * $6,120
Depreciation Expense = $2,448

Year 4:

Depreciation Expense = 40% * $3,672
Depreciation Expense = $1,469

Year 5:

Depreciation Expense = $2,203 - $2,000
Depreciation Expense = $203