*204. A company purchased office equipment for $30,000 and estimated a salvage value of $6,000 at...

Question

Question

Answer 1

Answer #1

Solution:

The formula for calculating the annual depreciation as per the double declining balance method is

= 2 * Cost of the asset * Depreciation Rate

Where the depreciation rate = 1 / Useful life of the asset

As per the information given in the question

The useful life of the asset = 8 years

Thus the Depreciation Rate = 1 / 8 = 0.125

= 12.5 %

Thus the Depreciation rate or constant percentage applied against book value each year if the double declining balance method is used = 12.5 %

The solution is Option b. 12.5 %

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Answer 2

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