Homework Answers
Depreciation expense to be charged using the Double Declining Method
It is a method of depreciation used by the companies when they want to quickly depreciate an asset.
The asset will depreciate much faster under this method than straight-line because we double the percentage that would be depreciated each year under straight-line.
Salvage value is not subtracted from Cost of Asset when depreciation is calculated by using this method.
The formula for double declining balance is:
Annual depreciation = Book Value * 100% / life * 2
Calculate the percentage that should be used first.
Percentage = 100% / Useful Life x 2 = 100% / 10 x 2 = 20%
Once the percentage is calculated, it is the same for the rest of the asset’s life.
|
Year |
DDB Depreciation for the period |
End of Period |
|||
|
Beginning of period book value |
Depreciation Rate |
Depreciation Expenses |
Accumulated Depreciation |
Book Value |
|
|
2013 |
70,000 |
20.000% |
14,000 |
14,000 |
56,000 |
|
2014 |
56,000 |
20.000% |
11,200 |
25,200 |
44,800 |
|
2015 |
44,800 |
20.000% |
8,960 |
34,160 |
35,840 |
|
2016 |
35,840 |
20.000% |
7,168 |
41,328 |
28,672 |
|
2017 |
28,672 |
20.000% |
5,734 |
47,062 |
22,938 |
|
2018 |
22,938 |
20.000% |
4,588 |
51,650 |
18,350 |
|
2019 |
18,350 |
20.000% |
3,670 |
55,320 |
14,680 |
During the Year 2019, the assets is sold for $13,000, so the assets must be depreciated till Year 2018
The book value of the asset at the end of 2018 = $18,350
Difference between Selling Price and Book Value = $18,350 - $13,000 = $5,350
Difference is Loss $5,350
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