Question

b) Prepare a depreciation schedule for the following scenario if the company uses the 150% declining balance method. A Inputs: Machine Cost Estimated Salvage Value Estimated Useful Life in Years 50,000 10,000 Depreciation Rate Annual Depreciation Expense Accumulated Depreciation Year Carrying Value 50,000 50,000 $18,750 own- 37.5% 37.5% 37.5% 37.5%

Answer 1

Solution

Year	Depreciation rate	Annul Depreciation expense	Accumulated Depreciation	Carrying Value
1	37.50%	$ 18,750	$ 18,750	$ 31,250
2	37.50%	$ 11,719	$ 30,469	$ 19,531
3	37.50%	$ 7,324	$ 37,793	$ 12,207
4	37.50%	$ 2,207	$ 40,000	$ 10,000

Working

	Cost	$ 50,000
B	Residual Value	$ 10,000
C=A - B	Depreciable base	$ 40,000
D	Life [in years]	4
E=C/D	Annual SLM depreciation	$ 10,000
F=E/C	SLM Rate	25.00%
G=F x 1.5	150% Depreciation rate Rate	37.50%