A water purification system for a rural business had an initial cost of $ 4000, an...
A water purification system for a rural business had an initial cost of $ 4000, an expected life of 5 years, and no scrap value. Use the double-declining-balance method of depreciation to find the book value at the end of 3 years.
Homework Answers
Depreciation rate = (100% / 5) × 2 = 40%
Depreciation for first year = $4,000 × 40% = $1,600
Book value at the end of first year = $4,000 - $1,600 = $2,400
Depreciation for second year = $2,400 × 40% = $960
Book value at the end of second year = $2,400 - $960 = $1,440
Depreciation for third year = $1,440 × 40% = $576
Book value at the end of third year = $1,440 - $576 = $864
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