A three-year-old machine that has a cost of $63,000, an estimated residual value of $5,800, and an estimated useful life of five years. The company uses double-declining-balance depreciation. |
Calculate the net book value at the end of each year. Net book value: First year Second year Third year |
Annual depreciation rate as per straight line method=100/5=20%/year
Hence depreciation as per double decline balance=2*Annual depreciation rate as per straight line method*Beginning value of each period
Year | Beginning value | Depreciation | Net book value at end of year |
1 | 63000 | (2*20%*63000)=$25200 | (63000-25200)=$37800 |
2 | 37800 | (2*20%*37800)=$15120 | (37800-15120)=$22680 |
3 | 22680 | (2*20%*22680)=$9072 | (22680-9072)=$13608. |
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