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When calculating depreciation using the double-declining method, how do you know when the book value will...

When calculating depreciation using the double-declining method, how do you know when the book value will be less than its residual/salvage value?
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Answer #1

In case of double declining method, depreciation is calculated as double declining depreciation rate multiplied by beginning book value of asset. The ending book value is then calculated as beginning book value less depreciation expense.

The ending book value at end of each year is compared with residual or salvage value in order to determine if asset book value is fallen below residual value.

If assets book value is fallen below residual value then the depreciation expense is reduced to extent that book value at end would be equal to its salvage value.

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